When most people attempt to budget for retirement, they tend to calculate how much savings they’ll need based on their personal lifestyle choices and anticipated expenses. Aspects of day to day living such as housing, food, and medical care tend to eat up a large chunk of the average person’s retirement savings, with items such as entertainment and hobbies falling closely behind. While it’s natural to remember to account for such facets of retirement life, plenty of people tend to forget about the potential “big ticket” items that could arise over the course of their retirement. Jim Barker of Barker Insurance Services is a personal financial representative who spends much of his time helping clients calculate their retirement budgets and develop savings plans accordingly. He likes to remind people that when estimating the cost of retirement, they ought to be aware of the following major expenses that could come up during that time:
College
Depending the age of your children, there is a good chance that you might still be paying those university bills well into retirement. Don’t forget that the cost of college goes far above and beyond tuition fees and housing. College students also need money to cover the cost of books, entertainment, and travel expenses to and from home. When drawing up that retirement budget, remember to account for each child’s college education and all the secondary expenses that come along with it.
Weddings
Watching your child get married can wonderful, but it can also come with a hefty price tag. From attire to photography to the often outrageous dining cost per head, even a modest wedding with minimal frills can set a family back a good $20,000, depending on the venue and size of the guest list. If your children aren’t married by the time you’re set to retire, then don’t forget to allocate some funds towards the cost of a potential wedding. This advice holds true for parents of daughters as well as sons. While tradition used to dictate that the bride’s family should pay for the wedding in full, these days, parents of the groom are often expected to split the cost, or, at the very least, chip in a fair amount. When planning for retirement, be sure to set some money aside so that you don’t end up denying your child her dream wedding.
Grandchildren
As much as you might love your children, when they start having babies, those little ones are quickly going to become your true pride and joy. While the financial responsibility of raising children should primarily fall on the parents themselves, most grandparents tend to spend a fair amount of money on the newest additions to their family. From showering them with toys to contributing to their college savings plans, if grandchildren become part of the picture, then you’re going to want to have enough money on hand to spoil and support those kiddies accordingly.
Transportation
The vehicle that you have when you first retire might not necessarily be the vehicle that you end up driving for the rest of your life. Cars, by nature, are designed to only last for a certain number of years or miles. So even if you start out your retirement with a relatively new vehicle, there’s a good chance that you’ll need to replace it 7 to 10 years down the line. Therefore, when coming up with that budget, be sure to include enough money to cover the cost of a new car at some point during your retirement, be it in the form of a lump sum purchase or monthly payments.
Planning for retirement can certainly be tricky, but now that you’re aware of some of the major financial items that might come up during that stage of your life, you’ll be in a better position to budget accordingly. Your personal financial representative can also help you take a close look at your life to uncover any other potential “hidden” expenses that might arise down the line. The process might seem a bit overwhelming, but with the right amount of financial planning, you’ll be putting yourself in the best position to afford your retirement on all fronts.
