After all your hard work to make your dream home become a reality, it’s finally time to relax … once you’ve made a financial plan, that is. When deciding how much you can invest in your forever home, consider the following:
The house and all that goes with it.
This is usually the largest monthly expense, regardless of square footage. According to visionretirement.com, housing expenses represent 35 percent or more of annual expenditures. This includes mortgage payments, HOA fees, insurance, taxes and maintenance. Since no home is completely maintenance free, one way to cut costs is to find a company that offers packages of multiple services you’ll need frequently. Finally, don’t forget to consider utilities.
Health care.
This category, including insurance, medical services, supplies and medications, ranks high on large expenses in this demographic. To minimize their financial outlay, soon-to-be retirees should familiarize themselves with Medicare, long-term care and health savings accounts for medical needs.
Taxes.
While you amassed your retirement funds in tax-deferred 401k plans or traditional IRAs, you will now have to pay taxes on withdrawals from these accounts. Social Security benefits may also be taxed, but interest made on Roth IRAs is not taxable.
Food.
This expense is more flexible and completely dependent on your dietary habits and how often you enjoy dining at restaurants, but you should set a monthly budget to keep your spending in check.
Emergencies.
No one can predict when an emergency will pop up or how much it will cost, but setting aside a little money each month will ease the blow of the upfront cost in the event one does arise.
Entertainment.
With more free time, be sure to enjoy it! To make the best bang for your buck, keep an eye out for senior deals in your frequent stops.
Travel.
When booking within your budget, look for sale destinations and visit during weekdays and off-peak times for a cheaper and less crowded trip. Some group-trip organizers offer attractive deals for seniors.
Family.
Factor in trips to visit family members, activities to make memories and putting something towards grandchildren’s futures.
