Retirement often forces people to put their spending habits under the microscope in ways that they didn’t during their working years. While you might find that you’re not spending as much in some areas, there’s every chance that new expenses will crop up. Here are just a few that you might encounter.
Boomerang children
Whether they’ve moved back home or never actually left in the first place, it’s common for young adults to be living with their parents these days.
While this might be a welcome development, it often means larger grocery and utility bills (unless, of course, your children are able to chip in).
Assisting your children in other ways
Even if your children have left the nest and show no signs of wanting to return, there’s always a chance that you’ll be asked to provide for them in other ways. That might mean paying for weddings, uni fees, and even chipping in once they have children of their own.
Perhaps the biggest one, however, is helping them to buy a home. Home prices have risen to eye-watering heights, and depending on how much help your children need to get a foothold in the market, your generosity could have a material impact on your retirement.
Providing for elderly parents
It’s not just your adult children you might be called on to assist. Australians are living much longer than they used to, and if your elderly parents are still alive they might need support too. This might mean letting them move in with your family, hiring a carer, or making senior-friendly modifications to their home.
Divorce
For many retirees who go through a divorce, the financial repercussions are sometimes greater than what younger couples experience. That’s because older divorcees generally have more to lose in divorce settlements and less time to do the difficult work of rebuilding their financial lives. Loss of the family home can also be difficult, especially considering how unfriendly rental markets can be these days.
Higher than expected inflation
Even low rates of inflation can have a large impact on the purchasing power of your money over time. If high inflation strikes, it could force you to cast aside a lot of the plans you made leading into retirement. And if recent history has taught us anything, it’s that periods of high inflation can persist for much longer than governments, central banks and everyday people are comfortable with.
Unexpected medical costs
Medical expenses tend to increase as we age, and while the more routine healthcare costs (e.g. medications and visits to specialists) might be easy to manage, a sudden injury or diagnosis of serious illness could easily throw your finances into disarray.
Aged care
Even if you had plans to “age in place” instead of entering aged care, life can throw you a curveball and force you to change your mind. The good news is that there are residential aged care options that are relatively low-cost (and financial assistance from the government is available if you’re eligible). However, you might prefer a more well-equipped facility with all the bells and whistles, which can cost significantly more.
