4 Important But Often Overlooked Retirement Expenses10 Aug 2021
Financial security is important at all times, and this is especially true during your golden years. Without proper planning, your choices become limited. You could end up having to downsize your home, your lifestyle, and maybe even continue working.
When mapping out your retirement budget, you will no doubt take into account your basic needs such as food and utilities, as well as any wants such as home improvements, travel and hobbies.
But what are you missing?
Here are four other common retirement expenses that most people, surprisingly, often forget about but should absolutely be ready for:
Many people tend to underestimate medical costs when planning for their retirement. Healthcare spending can easily take up a huge chunk of your budget during retirement. This is because as we age, we become more vulnerable to injuries and chronic conditions such as glaucoma, cataracts, arthritis, diabetes and heart failure.
Even though Malaysian senior citizens get free public healthcare, patients will still need to fork out their own money to cover certain costs (eg. intraocular lenses for cataract surgery). The long waiting times can also be an issue, and this could force patients to turn to private healthcare, which is a lot more expensive.
Prioritising your health from an early age can help minimise the medical issues you face as you get older. A health insurance plan is also highly recommended to protect your hard-earned savings against critical illnesses and medical emergencies. Check out Gibraltar BSN’s range of affordable medical plans here.
If you make healthy living a habit, chances are you won’t need long-term care when you’re older. But you can never know for sure if an accident or illness will suddenly change your ability to perform everyday activities on your own. And what if your loved ones are unable to help because of their other commitments?
The best time to think about long-term care is before you need it. The range of services - which include assistance with daily activities such as meal preparation, household chores, bathing, dressing, grooming, using the bathroom, eating and taking medications, among others - can potentially cost you thousands of ringgit each year.
In Malaysia, long-term care insurance is currently not available. So when building your retirement fund, you should take into account the potential costs for services that can help you live as independently and safely as possible.
Inflation refers to the rate of increase in the prices of goods and services over a period of time, whether it’s a bar of soap, a carton of milk, or the cost of an MRI scan.
Unfortunately for consumers, inflation is a part of life. Yet, not many people think about it when planning for their retirement. If not accounted for, inflation can sneak up on you and overtime, become a threat to your retirement nest egg.
No one has the perfect crystal ball when it comes to inflation. The best thing you can do is to simply be ready for it. Plan on saving more, and grow your money through long-term investments. The sooner, the better.
Family members that require financial assistance
With people now living longer, there is a possibility that you could enter retirement while your parents are still alive, and they may fall back to you for financial support if they outlive their savings. It’s also possible that your adult children may come to you for assistance if they face financial difficulties at some point.
It’s a good idea to have a talk with your parents and children about their finances and plans for retirement, and make any necessary adjustments from there. Another idea worth considering is to look out for any government assisted programmes that all of you can take advantage of.
Does your retirement budget account for the possibilities mentioned above? Thinking about them now can help relieve the stress on your savings in the future.
To help secure your nest egg further, consider an endowment plan such as Gibraltar BSN Go LiveWell, which offers long-term benefits with a short-term commitment.