Tags: Retirement | retirement | expense | spending | planning

USAToday: 5 Personal Expenses That Will Change in Retirement

USAToday: 5 Personal Expenses That Will Change in Retirement
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By    |   Tuesday, 26 April 2016 07:00 AM

Saving for retirement is hard enough as it is with near-zero percent interest rates, rising costs of housing, education and healthcare, in addition to meager income growth.

Another difficulty is getting a handle on what your expenses will be — especially if retirement is 20 to 30 years away.

“The difficulty of nailing down future expenses may be one reason why nearly half of workers haven’t attempted to calculate how much money they’ll need for retirement,” USA Today reports, citing data from the Employee Benefit Research Institute. “If that’s you, you’re missing out on potentially good news: Many people spend less after retiring than they did beforehand.”

Post-retirement households (ages 65 to 79) spend about 77 percent of what they did before retirement (ages 50 to 64), according to the Government Accountability Office data cited by the newspaper.

The newspaper lists five expenses that will change in retirement, and should be an important part of planning ahead.

5 Expenses That Will Change in Retirement

1. Healthcare Spending: “Both your health insurance premiums and your out-of-pocket medical costs may rise in retirement, even after Medicare kicks in — especially if your employer picked up a large portion of your insurance premiums pre-retirement.”

2. Saving for Post-Work Life: “One of the best things about being retired is you’ll no longer have to save for retirement. It’s also one reason why one retirement-planning rule of thumb recommends replacing just 80 percent of pre-retirement income.”

3. Insurance Costs: “In a typical scenario, you don’t need life insurance in retirement because you no longer have income to replace (instead, you’re drawing income from investments), and in many cases, you’ve paid off big debts, such as a mortgage. Disability insurance, meant to replace income if you’re no longer able to work, generally isn’t needed if you’re not working.”

4. Taxes: “There’s a good chance at least some portion of your retirement income won’t be taxable." Roth IRA withdrawals aren’t taxed after the minimum age limit, while “Social Security income is only taxed if you have substantial income from other sources.”

5. Housing and Lifestyle Spending:
Paying off a mortgage can be a huge relief on living expenses, although you’ll still have to cover homeowners insurance, property taxes and upkeep. “As for other lifestyle spending: Some people want to spend retirement on an airplane; others want to spend it on the couch. Where you fall on that spectrum will determine how your expenses will change.”

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Saving for retirement is hard enough as it is with near-zero percent interest rates, rising costs of housing, education and healthcare, in addition to meager income growth.
retirement, expense, spending, planning
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2016-00-26
Tuesday, 26 April 2016 07:00 AM
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