You work for decades with the hope of enjoying retirement. It’s meant to be a journey full of enjoying experiences you’ve long wanted to do and spending time with those closest to you. Then, it happens.
You retire and things appear different than what you expected. There’s no doubt that retirement can be enjoyable, but it does present some unique realities you may not have planned for during your working years. Here are ten things no one tells you about retirement.
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Taxes Are Still a Pain
Taxes are rarely fun, and that’s still the case in your retirement years. It’s common to think that your taxes will go down in retirement.
That’s not always the case. If you saved money in a deferred retirement account you will pay taxes on withdrawals. Social Security benefits may also be taxable.
If you can, choose a state that is tax-friendly to help soften the blow.
You May Have Little Cash Flow
During your working years you have a guaranteed source of cash flow – your day job. Unless you have a job during your retirement, your cash flow is limited to withdrawals from your retirement plan and Social Security.
You’re More Prone to Scams
Study after study reveals one unfortunate truth – retirees are more prone to scams. This ranges from email scams, to suspicious phone calls and more.
If something you see seems too good to be true, it likely is. When in doubt, ask a friend or family member and remember not to click anything you don’t trust.
Inflation Has a Greater Impact on You
Inflation directly impacts your purchasing power. This is problematic enough for full-time workers.
It gets even worse for retirees as it can eat into your savings. This will likely impact your standard of living, especially if you’re not a careful planner.
You May Outlive Your Savings
Depending on when you retire, your retirement funds may need to stretch for decades. You must exercise wise spending and, if possible, delay claiming Social Security as long as possible to ensure more benefits.
It’s fine to enjoy your golden years, just do so prudently to maximize your resources.
Social Security May Not Be Enough
Social Security is a fantastic resource to help you during retirement. However, it shouldn’t be your only tool to use.
Unfortunately, recent reports indicate 40 percent of retirees rely solely on Social Security for their retirement. While you may find it’s enough for you, do you really want to limit yourself so much?
Boredom is Likely
When you retire, you suddenly have many more hours in the day to fill. If you don’t actively plan to fill those hours, boredom is probable.
You may find that friends are still working, or that a hobby you want to pursue is too expensive. It’s possible you may even want to get a part-time job to fill part of your time.
It’s Not Time to Spoil Your Children
It’s fun to spend on your children or grandchildren. That’s a normal part of life, but it’s easy to take it too far.
Don’t overextend yourself by overspending on your family. Instead, set a budget that works with your finances and don’t go over it. The last thing you want is to outlive your savings because you spent too much on your family.
You Still Have to Pay For Your House
If you paid off your mortgage before retiring, that’s fantastic. However, it’s not all free and clear.
You still have to pay property taxes and insurance. That’s not to mention maintenance costs. You can move to a state with low property taxes to mitigate this some, but it won’t alleviate it completely.
You Will Likely Lose Health Insurance
Health insurance is a racket. It’s likely your employer provide for your needs while working. In all likelihood, you will lose that benefit when you retire.
Furthermore, Medicare isn’t 100 percent free. You still have to pay premiums and co-pays. Given that the average retired couple spends $250,000 on out-of-pocket medical costs, this is something to manage prudently.
Money Mistakes to Avoid in Retirement
Wise financial moves are essential in retirement. Falling prey to mishaps can be ruinous. Here are 13 money mistakes to avoid in your retirement years.
Money Mistakes to Avoid in Your 60s
The 60s are an important decade for most. Unfortunately, it’s easy to derail your retirement plans. Here are 12 money mistakes to avoid in your 60s.
11 Best Cities to Retire To
Are you looking for an affordable retirement destination that doesn’t limit fun? Here are 11 economical places to retire in to stretch your budget and maximize enjoyment.
Purchases Boomers Must Avoid in Retirement
Large purchases in retirement can be hazardous to your retirement plans. Here are 12 purchases Boomers must avoid in retirement to ensure they have enough resources.
Worst States for Boomers to Retire To
Not every State is a good option for boomers to retire. Some actually give off that they don’t want boomers living there. Here are 11 States that don’t want boomers.
I’m John Schmoll, a former stockbroker, MBA-grad, published finance writer, and founder of Frugal Rules.
As a veteran of the financial services industry, I’ve worked as a mutual fund administrator, banker, and stockbroker and was Series 7 and 63-licensed, but I left all that behind in 2012 to help people learn how to manage their money.
My goal is to help you gain the knowledge you need to become financially independent with personally-tested financial tools and money-saving solutions.