Do we really know how much money we need to retire? When will we spend that money? How should I invest?
Retirement needs and spending often tend to become a big black hole.
Pre-retirees get so caught up in the details of investing that they forget to manage the spending side of the equation. Every retiree has two clear, known expenses, the most expensive being housing and medical expenses.
Follow these tips to start planning for these two big expenses now.
Housing expense
According to , housing spending increased by 7.4% in 2022. Bureau of Labor Statistics. Whether you rent or own, you don’t need to look at a survey to realize that housing costs are rising. There are ways to keep this cost under control and move through the process with peace of mind.
read: ‘There’s not enough housing to meet aging needs’: The ideal home to age in the right place may not exist
1. Regular maintenance and upkeep
If you own one, it will keep your home in good condition for many years. Regular upkeep and upkeep not only makes for a better home, but also maintains the value of your home. Whether you plan to stay in retirement or not, a home in good condition sells faster, is more livable, and costs less in retirement.
If your home needs painting work, make a plan and get it done. Do you have new windows covered in vinyl to keep the cold out? Perhaps it’s time to install new ones. Even small maintenance tasks like gardening or repainting a room have the added benefit of increasing the value of your home while allowing you to enjoy it now.
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A word of caution: Don’t update your kitchen or make other major improvements just because you want to sell and make more money. Large expenditures do not guarantee full recovery. By some estimates, only half of kitchen improvements are recouped through sales. Only make updates like this if you have the money and plan to enjoy it for many years before selling.
2. Pay off (or pay off) your mortgage
When you pay off your home, the property is completely under your control. You can control your investments, but the direction of the stock market is in someone else’s hands. By paying off your home sooner, you can expand your retirement options.
When I suggested this approach to one of my clients, they thought twice about wasting their money paying off their mortgage when they could have invested. Yes, the market may make you more money, but you can also lose money.
The assumption is that you will pay for your home and its improvements with “other people’s money.” They rarely look at the next layer to understand that they are paying for the privilege of using other people’s money. The interest your mortgage company or bank receives from you is a fair business exchange. But for most of us, mortgage interest is no longer tax deductible, hurting our financial benefits.
Owning a home outright is most valuable for peace of mind. Try it and see how much of a difference it makes.
3. Evaluate your space for future use
If your goal is to stay at home in retirement, start thinking critically now. Is living on one floor an option? Or can you add a stair elevator or add additional handrails now when the time comes? When updating a bathroom, make sure you have handrails and a comfortable height. Add a toilet. You may be in great health right now and plan to stay that way, but if you want to age that way, small changes can make a big difference.
These small upgrades can make a big difference in your quality of life. Doing it now while you still have the income means you’ll spend less in retirement and be better prepared for it, rather than waiting and needing a quick fix or an expensive move.
There are also aging-in-place specialists whose job it is to evaluate your space and make recommendations if necessary.
4. Consider other locations that might be a good fit for you.
If you’re looking to move closer to retirement or want to become a “snowbird,” start looking for a place now. There’s no need to move or buy property. Visiting friends for a few days or vacationing in a location you’re considering gives you a little chance to see if the area fits your lifestyle.
Even if you’re thinking of downsizing and staying local, you need to understand the types of properties available in your area. Today’s options are expanding. From regular condos to over 55 living and life care communities, deciding which one is right for you can be overwhelming. It’s a good investment of your time to try your hand at it now by visiting or stopping by a business office.
Thinking now about how each choice will affect your wallet, lifestyle, and retirement goals will make the decision-making process easier.
Medical bills
Age-related medical conditions are inevitable. They range from small to life-changing. Some symptoms are more likely to occur due to genetics, but they can also be improved by maintaining good health.
1. Manage your medical condition
You can’t change that, but you can be aware of your illness and potential. Don’t wait until retirement to focus on what’s going on in your body. Are you starting to develop cataracts? Wear sunglasses more effectively. Are you pre-diabetic? Manage your sugar intake. Maintain your health by undergoing regular health checkups while working.
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2. Exercise regularly
This important phrase is repeated so often that we may have missed it. But have you ever considered it as part of your retirement plan? If you want to stay active in retirement, you need to act now. Exercise for your mental and physical health. Whether it’s an after-dinner walk or a membership at a CrossFit gym (the one you go to!), any physical activity can lead to a healthier, happier retirement.
3. Eat right for your health
That sounds good, but what is the right diet for your health? If you’ve never met a nutritionist or learned about good eating before, now may be the time. Food can’t stop all illnesses, but it can make you feel better. Eating right has great benefits.Learn about mediterranean dietmay help you live longer.
read: 10 ways to protect yourself from dementia, according to science
Think you can change your lifestyle? Here are some examples of lifestyle changes that can positively impact your future retirement.
At the age of 60, Mario began long-distance running to manage his health condition. He has lost weight, his mood has improved and he has stopped taking medication.
At five o’clock, Marian finally stopped smoking and now walks almost every day.
Jose, 45, stopped drinking with the boys on Friday nights and is now completely abstinent from alcohol as he feels better and has lost weight.
These people have one thing in common. It means that you take care of your body and that it helps your health. You can teach your old dog new tricks.
Create maximum flexibility now, literally and figuratively, to create the best retirement possible. We cannot control most things in life. I understand that there are no guarantees. We can keep things in our hands that we can control when it comes to future spending in retirement. As a result, you will be better positioned in retirement.
CD Moriarty, CFP, is a financial speaker, writer, and coach based in Vermont.She can be found at moneypiece.com.
