{"id":14972,"date":"2023-04-12T13:22:53","date_gmt":"2023-04-12T18:22:53","guid":{"rendered":"https:\/\/johnsonwim.com\/?p=14972"},"modified":"2023-04-12T13:22:53","modified_gmt":"2023-04-12T18:22:53","slug":"planning-for-unexpected-expenses-in-retirement","status":"publish","type":"post","link":"https:\/\/johnsonwim.com\/planning-for-unexpected-expenses-in-retirement","title":{"rendered":"Planning for Unexpected Expenses in Retirement"},"content":{"rendered":"

Retirement<\/a> is a time that many people look forward to. It’s time to finally sit back and enjoy some well-deserved rest and relaxation. However, with any major life change it’s important to plan ahead and help be prepared for the unexpected.\u00a0<\/b><\/p>\n

To help retirees in Iowa face these financial challenges with confidence, Johnson Wealth and Income Management has compiled a guide to help you prepare for unforeseen expenses and help safeguard your retirement. In this blog, we will discuss the types of expenses that can arise, and some strategies to help mitigate their impact on your retirement savings.\u00a0<\/span><\/span><\/p>\n

1. Hidden Housing Costs<\/b><\/h3>\n

Mortgages are the largest debt owned by many Americans, but paying them off before reaching retirement age isn\u2019t feasible for everyone. In fact, across the country<\/a>, nearly 10 million homeowners who are still paying off their mortgage are 65 and older.<\/span><\/p>\n

Many look beyond their monthly mortgage payment when estimating their long-term housing costs. According to a recent study, <\/span>home repairs are retirees\u2019 single most common financial surprise.<\/span><\/a><\/p>\n

To avoid being caught off guard, it’s important to have a plan in place for covering these unexpected housing expenses. One helpful strategy is to have your home inspected by a professional to identify any hidden problems before they become major headaches. This can include issues with your roof, plumbing, electrical system, or other major components of your home. <\/span>A good rule of thumb is to budget 1% of your home’s total value for annual repairs and maintenance. For example, if your home is worth $500,000, you should budget $5,000 per year for repairs and maintenance. <\/span><\/p>\n

By taking these steps, you can help ensure that unexpected home repairs do not derail your retirement. With careful planning and budgeting, you can better enjoy your home and your retirement with greater peace of mind.<\/span><\/p>\n

2. Healthcare Costs<\/b><\/h3>\n

A common issue among retirees is a lack of understanding regarding the extent of Medicare coverage.<\/a> While Original Medicare (consisting of Part A for hospital stays and Part B for doctor visits) may be familiar to many, it’s important to note that numerous additional expenses and services are not included in this coverage.\u00a0<\/span><\/p>\n

This may mean enrolling in additional Medicare parts or purchasing a private Medigap policy which can help cover expenses like deductibles, coinsurance, and copays. It’s important to understand that each approach may come with costs and trade-offs.\u00a0<\/span>Medigap plans, for instance, may mean fewer out-of-pocket expenses but generally have higher premiums. Medicare Advantage, on the other hand, may have lower premiums but could involve more out-of-pocket expenses. <\/span><\/p>\n

According to recent data,<\/span><\/a> 24% of Medicare beneficiaries who enrolled in a Medicare Advantage plan did so because of its added benefits, while 20% cited the limit on out-of-pocket spending as their primary reason for selecting this option.<\/span><\/p>\n

No matter which option you ultimately choose, it’s wise to seek guidance from a trusted retirement income planner,<\/a> such as a fiduciary advisor. A fiduciary advisor can assist you in reviewing your choices and determining the best course of action for your unique healthcare needs.<\/span><\/p>\n

3. Long-term Care<\/b><\/b><\/h3>\n

Someone turning 65 today has almost a 70% chance of needing <\/span>long-term care services<\/span><\/a> and support in their remaining years. Retirees may be able to reduce long-term care<\/a> costs by turning to their families for help. However, those who can’t or don’t want to rely on their loved ones for care can generally help cover these expenses in one of two ways:<\/span><\/p>\n