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coinTreeDon’t retire without a plan to pay for these expenses.  Don’t forget to budget for the travel and hobbies you will finally have time for in retirement.  Most people accept that retirement won’t be cheap.  But just how expensive will it be?

Visions of the ideal retirement range from the extravagant pursuit of everything we have dreamed of to frugal plans calculated to stretch the buying power of our hard earned savings. Whatever course we set, we need to accurately estimate and budget for our future. While the final tab will vary depending on your lifestyle, some expenses are shared across the board and need to be budgeted for.

Health care costs
Health care costs will be one of the biggest expenses you must deal with in retirement. A 65-year-old couple retiring in 2013 will need $220,000 to cover health care costs during retirement, according to calculations by Fidelity. This figure is based upon average life expectancy data. If you are lucky enough to live longer, those costs can be even more. And these numbers do not account for long-term care expenses. The U.S. Department of Health and Human Services predicts that 70 percent of those age 65 and older will require some type of long-term care services.

The cost of care varies depending on whether you receive it at home, in adult day care, at an assisted living facility or in a traditional nursing home. The average cost for a private nursing home is about $90,000 per year, assisted-living facilities average $3,477 per month and hourly home care rates average $46 for a Medicare-certified home health aide, according to MetLife. Failure to account for this significant expense means you may not be able to afford the care you need.

Basic living expenses
Some expenses go away in retirement. Most education loans and mortgages have been paid off, or at least significantly reduced. And retirees no longer need to set aside money to build a nest egg. But other expenses will stubbornly continue. It is reasonable to expect basics like gas, electric, water, TV, Internet and garbage bills to remain relatively unchanged with the exception of normal rate increases over time. Food bills should also remain relatively stable unless you decide to upgrade your lifestyle to gourmet status. You will need to include the cost of various insurance programs you subscribe to, potentially including health, home, automobile, liability and long-term care coverage. And even if you own your house outright, depending on where you live you may have to pay property taxes that can amount to 1 percent or more of your assessed value.

Recreational expenses
No one looks forward to a retired life spent doing nothing. Instead, we see ourselves engaging in activities and adventures we could not undertake while mired in the working world. Since this is our time to do what we want, we need to budget for recreational expenses to take advantage of our new freedom. Many retirees hope to travel more and spend longer periods of time at various destinations. My wife and I like to focus our travel on the destination rather than the accommodations. It is easy to spend a fortune on fancy lodging and big meals. But with a little effort you can spend time in faraway places without ruining your budget. A little frugality can allow you to visit more destinations while building quality memories along the way. Whatever your retirement recreation choices, it is important to have sufficient savings to fund your efforts.

Unforeseen expenses
Over the years we have had to deal with many unexpected bills. A family member needs to move home “for awhile” to get back on his feet, the transmission in the car goes out or an unexpected illness necessitates a hospital stay. A single emergency can have a significant impact on carefully laid retirement plans. You can add to your peace of mind by setting aside a monetary cushion for possible expenses that might suddenly materialize in retirement.

Miscellaneous expenses
Do you like to collect vintage automobiles, take luxury cruises or visit top rated restaurants. While these things may boost the quality of your retirement experience, they can also add to expenses. You don’t want retirement to be a time when you are forced to set aside the unique interests you have been waiting for so long to explore. If you can make the right preparations and set aside the necessary funds there is no reason you cannot feed your fancies as a retiree.

Article attributed to US News & David Bernard