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How to Evaluate Your Finances for Retirement

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How to Evaluate Your Finances for Retirement

Retirement is an exciting time in your life. Finally, you get to leave the rat race and concentrate on doing what you want! No more punching that time clock – now you can travel, spend time with friends and family, and just simply enjoy the good life. That is, as long as you can afford to do so; the biggest hurdle to overcome when it comes to retirement has always been ensuring you have the finances to live the life you’ve always imagined. 

This means, of course, that you need to make sure you’ve got those finances ironed out before it’s time to retire. It can be difficult to evaluate your finances accurately, though – and that’s why we’ve created this short guide on understanding retirement-related costs and how you can control them. Here’s what you need to know! 

Housing Costs May Be Your Biggest Hurdle 

It likely goes beyond saying that you’ll need to have a nice nest egg saved up to live off of during retirement. Whether it’s from savings, a pension plan, or investments, you obviously need financial resources to live off of once you stop working. At the same time, you also need to control the amount of money you spend on actual living – and one of the biggest retirement-related costs out there comes down to housing. This leads plenty of people to plan on staying in their existing home in an effort to make retirement more affordable. 

You might think that you can age in place in your current home to help save on housing costs, but for many, this ends up being the wrong decision. The expenses associated with maintaining a property are often much higher than you realize, especially when you factor in property taxes, utilities, and maintenance and repair costs. On the other hand, the sale of an existing home can help bolster your retirement savings by a sizable margin – even after reinvesting some of the proceeds into living elsewhere, such as a smaller home, an apartment, or a retirement community. 

It’s that last one we’d like to go into more detail on, since it’s likely the one you’re the least familiar with. 

So What’s the Deal with Retirement Communities? 

With aging in place possibly a losing proposition when it comes to making your retirement affordable, it’s time to look at the alternative: living in a retirement community. A portion of your home sale may be able to finance your move to a retirement community, and all utilities, maintenance, lawn care, snow removal, etc. will be covered by your monthly cost. But that’s not the real benefit — it’s the available extra amenities that end up making retirement communities such a good deal. es included in that monthly fee, you’ve got an absolute bargain on your hands. 

What kinds of amenities are we talking about? Think fitness centers and trainers to remove your gym membership costs, fine dining to cover portions of your food budget, and even a hair salon on campus. Plus swimming pools of course, art and woodworking studios, classes for hobbies (like painting) and learning (like a new language) computer rooms and library rooms, performing arts centers, and beautifully landscaped outdoor areas including walking trails, shuffleboard courts, gardening opportunities, and more. All of these amenities, literally right outside your door, make it easier than ever to enjoy your retirement without having to worry about extra costs that would be associated with joining a country club or something similar. Now that’s a great way to stretch your retirement savings! 

Don’t Forget Your Healthcare Costs 

Finally, you need to also take a good, hard look at what you expect to pay for your healthcare costs during retirement. While you will likely have access to Medicare, it’s important to realize that Medicare does have coverage gaps, especially for more advanced medical issues. If you’re relatively healthy, you might think you can get away with that, but don’t forget that as our bodies get older, our physical needs change – and that includes what we may require in terms of healthcare. 

Paying out of pocket is simply a non-starter when it comes to ensuring your finances are ready for retirement. You can’t budget for your lifestyle if you don’t know what your healthcare budget will be. One solution is to move to a continuous care retirement community (CCRC). These types of retirement communities offer continuity of healthcare to residents that keep up with their needs as they age, with no increase to their monthly costs based solely on a change in care. What this means is you can enter as an independent living resident enjoying all the freedom and fun the communities amenities have to offer, and maintaining a consistent, planned-for budget. Then, should you or your significant other ever need a higher level of care such as assisted living or skilled nursing care, it’s already accounted for in your budget. You simply move into the needed care on your current community. This is often the most efficient way to ensure your finances can handle retirement when it comes to healthcare. 

Get Professional Help 

Getting your finances in order for retirement is a big job. Not everyone has the kind of head for numbers that you need to see the big picture, and if you’re one of those individuals who has always had trouble seeing the forest for the trees, there’s nothing wrong with seeking a little outside help. In fact, it’s strongly recommended that anyone looking to get their finances in order for retirement to enlist the aid of a professional in the form of a financial planner with a background in retirement savings and investments. 

In fact, there is never a bad time to speak to a retirement planner. The sooner you begin the process of organizing your finances with an aim towards building your retirement nest egg, the better; these financial planners can help you fine-tune your savings and investment plans to ensure you’ll meet your goals on time and be able to enjoy the quality of life you want when it finally comes time to retire. Remember: it’s literally a retirement planner’s job to know how to evaluate your finances for retirement! 

It’s Time to Start Evaluating Your Finances for Retirement 

It’s never too early to begin getting your house in order when it comes to retirement and its financial requirements. In a world where the future is uncertain, it becomes an absolute requirement. Be sure to evaluate your finances early and often – and don’t be afraid to get professional help! 

Want more information about preparing for retirement? Read these articles by Acts-Retirement Life Communities. 

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