3 costs of retirement you might not have thought about
In order to have a cruisy retirement, you’ve got to plan ahead. The question is, what exactly do you plan ahead for? Everyone knows the typical costs they might have to cover in their golden years, such as typical living expenses, housing and the odd vacation. But there are a number of less well-known costs that could end up stinging you if you’re not careful.
Here are three you should definitely consider when doing your financial planning.
1. Your family
According to the 2015 Future Leaders Index, most 18-29 year-old Australians who purchased a property have done so by getting help from their parents.
Although the idea is that once the kids move out and become adults you don’t have to worry about them anymore, the truth is a lot different. It was all the way back in 1999 that the Social Policy Research Centre warned that the financial dependency of young people had increased, partly due to lower incomes.
Meanwhile, according to the 2015 Future Leaders Index, most 18-29 year-old Australians who purchased a property have done so by getting help from their parents, either for financial assistance or asking them to be guarantors. Couple this with the fact that you’ll have to think about leaving your loved ones an inheritance, and your family is likely to continue to make up some portion of your post-retirement costs.
2. Legislative changes
The present cost of retirement is based on the idea that the laws surrounding your superannuation and Age Pension won’t change between now and the time you’re ready to hang it up. But as we’ve seen from this year alone, legislation is always changing.
According to the Association of Superannuation Funds of Australia, partly due to the recent changes to the Age Pension, an Australian couple will now need around $130,000 more in the pot for retirement. Who knows how laws will change in the future, and how they will add to how much you need to save – it’s best to have an extra buffer built in.
3. Unexpected emergencies
It’s not pleasant to think about, but there are a wide range of sudden, unexpected emergencies that could put pressure on your savings. Your property might require an urgent and costly repair or your car might break down.
At worst, you or your spouse might suffer some bad health and will need to be provided for. According to a joint report from Cancer Council Australia and the Clinical Oncological Society of Australia, cancer adds an average of $47,200 per person to a household’s expenses over a lifetime, although this can be as high as $150,000 for brain cancer. That’s why it’s important to have the right insurances in place, too.