While some of us may harbor thoughts of retiring somewhere on the Mediterranean, with a cocktail in hand, for others retirement is more of a practical subject. It is something that brings a lot of uncertainty, both emotional and financial. As you may have gathered, today’s post is going to hone in on the latter.
While there will be all sorts of costs that creep out of the woodwork as we edge into retirement (far more than could fit on a beer mat), today is all about summarizing some of the hardest-hitting ones. Let’s take a look at the four in detail.
Cost #1: Elderly care
This first one is a topic that has been covered by the press on a scary number of occasions. There is a general consensus that the country is on the brink of an elderly care crisis and if the need arises, many believe that they won’t have the financial capacity to cope.
Granted, the government is trying various initiatives to assist with this, but it remains to be seen how they will work. For us, the message is simple, make sure you have some savings which might be able to cover elderly care if the need does arise.
Cost #2: The kids flying the nest
A somewhat brighter topic covers the kids flying the nest. Nowadays, university is the most common destination and while various government initiatives can assist with this, most parents will help with matters as well. A lot of funding for students is means-tested, meaning that some kids just won’t get the same amount of help as others.
This is where you need to assess the situation and calculate if, and how, you are going to help. This can be a strong financial commitment, with university fees, accommodation and general living costs spiraling into the tens of thousands. If the Guardian is to be believed, the typical cost in the UK is £360 per month.
Cost #3: Funeral care
If we return to a more morbid subject, the cost of a funeral is something that most of us don’t think about but probably really should. If we leave it “too late”, it’s something that can blight family finances for years to come. It’s the sort of cost which is best to tackle in the here and now. These are the types of arrangements you need to be thinking about to ensure that you are financially sound as you move into later life.
Cost #4: The cost of your kidís lives
Finally, it is back to the kids. We have spoken about the costs of sending them to university, but something else to be aware of is the cost of helping them get on the property ladder. This is becoming an increasingly common practice, for the simple reason that house prices are constantly rising.
There’s an argument to suggest that you certainly don’t have to do this, and many parents don’t. However, it’s worth putting it out there that more and more are doing and this should therefore be something that you factor into your costs as you edge closer to the retirement age.