Reasons why you need an emergency fund and create a safety net for your nest egg…
Think about what you spend in a month, but only think about the necessary expenses. Rent, groceries, utilities, car payments, gas.
Chances are, you know how much all of this is costing you. You probably already also know how much you spend on miscellaneous items, such as dinners out or drinks.
Now think about what a future medical bill may cost you. Is it harder to estimate? If you found yourself asking what the bill was for, if it was a hospital bill, if it was a prescription pick up or a minor injury and trying to calculate its costs, then you need this article.
We all know how much our regular expenses cost us each month, but we often forget to plan for the irregular occurrences. While neglecting these costs is a problem at any age, it can be especially detrimental during your retired years.
Read on to find out more information on to find out what extra costs extra costs you should always be prepared for during your retirement!
Both major and minor. Major home repairs include roof replacements, building an addition or replacing windows/flooring. If you own a home, it is going to cost you money to keep it maintained and to help it keep its value. Your home is an investment, so you should estimate how much money you will need to put into it in order to maintain its value.
The problem with planning for this expense is that you will never know how much you need to spend for upkeep. Some years you may have to spend less, and other years you may find that you have to spend more for our home to keep its value. A regular savings plan can mitigate this uncertainty.
Additionally, if you are maintaining your home while you still have a consistent salary, you should consider downsizing during your retirement in order to cut costs.
It is unrealistic to assume that you won’t be taking any vacations or trips during your retirement. You should be planning for a trip to see your family, vacations or travel expenses when you are saving.
If you neglect to factor in these savings, you may have to stay put during your retired years, which could end up being an extra twenty to thirty years! If you and your spouse have always wanted to go on a trip or vacation, your best bet is to look at prices as thought you were going to g sooner rather than in the future. This can help give you a good idea of what to save. Then, add a couple extra hundred dollars to that price tag to account for inflation, plane ticket costs and an emergency fund.
You may also want to join your Chamber of Commerce, a Rotary Club or a group that frequently travels. This way, you can potentially travel at discounted group rates.
We’ve talked about this one before a few times, but the truth of the matter is that health care can end up being your biggest financial setback if you aren’t prepared.
In order to prepare yourself for the unexpected, you should attempt to set aside money into a health savings account, or an HSA while you are still working. This way, you can utilize its tax benefits to help you pay for any future health-related expenses.
If you don’t live in a walkable city, you will definitely want to factor car repairs and replacement into your retirement funds.
Your car won’t last you forever, so you should begin setting side money now to replace it when the time comes. Even better: you should attempt to replace your car as close to your retirement date as possible, when you still have a steady income to help pay for it.
We do not recommend taking out a car loan, as it can cost you an additional sum of money that you hadn’t initially prepared for.
Unexpected expenses pop up frequently in life and it is important to be prepared for them. This is particularly impactful in your retired years, when an unexpected expense can drain your retirement nest egg.
When setting aside additional funds for these expenses, remember that you have to live on your retirement funds and Social Security. This can help you view these emergency funds as just that: emergency funds. By keeping them separate from your retirement funds and saving them in addition to your retirement funds, you are ensuring that your retirement will last you and that you are prepared for your future expenses.