Accurately estimating and managing your retirement expenses, including health care and housing, can help your retirement funds last longer. Call your Denver area financial planner, Jordan Dechtman, today at 303-741-9772 or email him at Jordan@JordanDechtman.com to schedule a review of your retirement expenses and your housing options.
Weekly Commentary for March 19, 2012
Health care is commonly referred to as the greatest expense Americans face in retirement, but according to a Feb. 15 Investment News article by Darla Mercado, health care comes in second. The biggest expense for Americans over 50 is housing costs.
Data from the Employee Benefit Research Institute (EBRI) showed that housing-related costs accounted for nearly half of Americans’ total expenses in 2009. Americans age 50 to 64 spent 47 percent of their total expenses – a median of $18,828 – on mortgages or rent, insurance, property taxes and repairs.
For Americans 50-64, the median spent on health care costs in 2009 was $2,844, or 9 percent of total expenses. That number increases with age up to $3,692 for Americans age 75 to 84 – accounting for 15 percent of expenditures – and dropping slightly to $3,000 for Americans 85 and older, but making up 18 percent of their total expenses.
Housing costs typically decrease as people age and eventually pay off their mortgages, but they still have large expenses associated with property taxes, utilities and maintenance costs. Sudipto Banerjee, a research associate with EBRI, notes that retired households spend about 80 percent of what they spent as a working household, but their income is equal to only 57 percent of their working counterparts.
To help lower your housing expenses, you may want to consider moving into a smaller home, condominium or apartment to reduce property taxes, utilities and maintenance costs. You may also consider selling or renting out your vacation home to reduce housing-related expenses.