It’s a fairly common belief that your monthly expenses will decrease after you retire, but what if they increase?

There are a number of reasons that even the Social Security Administration notes that “Most financial advisors say you’ll need about 70 percent of your pre-retirement earnings to comfortably maintain your pre-retirement standard of living.” Any expenses you had in your working years which were strictly work-related may disappear.

That might include items such as:

• a professional wardrobe (uniforms, suits and other dress clothes, etc.)
• dry cleaning for that wardrobe
• gasoline expenses for a long commute twice each workday
• lunch out with coworkers or dinner with clients

Indeed, many retirees find their ongoing expenses reduced by around 30% after they retire.

But that may not happen for everyone.

Consider what expenses might be covered (fully or partially) by your employer during your working years:

• all or part of your health insurance plan (you realize Medicare isn’t completely without its costs even if you are old enough and have worked long enough to qualify for Part A coverage, right?)
• depending on your work, perhaps your cell phone plan or even your internet expenses
• perhaps a once-a-year bonus around Christmas that you’ve counted upon to buy presents
• maybe something else unique to your profession

And then think about a couple of things which might affect everyone, whether working or retired:

• What if gas/diesel prices skyrocket (as they occasionally do)? No problem, you think, since you only need to drive to the grocery store a couple times a week. But how do you think those groceries get to that store? Probably on a truck. And when it costs more to deliver your groceries to the store, those cost increases will be passed along to you.
• What if the country goes through another period of higher inflation? That means everything costs more for everyone, and while paychecks may also rise slowly to cover those increases, will your retirement income be able to do the same?

And, of course, you can be fairly confident your healthcare expenses will rise as you age. Most of us are seeing the doctor more often even before we enter our sixties, but what about when you are in your seventies? Or your eighties? Living that long isn’t as uncommon as it used to be. How much healthcare will you need by then, and how much higher might the costs be by that point? What if you need Long Term Care?

These are the types of “What if…” questions and scenarios where a financial professional may be able to help you make better plans. Perhaps working a little longer before retirement can provide an extra cushion to cover unexpected increases in your future expenses. Maybe your investments can be structured to more readily keep pace with inflation.

James Holloway, Sr. and the rest of the team at Texas Financial and Retirement work with our clients to help them develop a written retirement plan both for the years before they retire and for after. We start by examining their current financial position and their personal goals for retirement. Then we can work with them to customize a plan to suit them personally. Contact bestclients@texasfinancialandretirement.com or 903-534-5477 to apply for a free initial visit to see if we can help you to get retirement right.

Investment advisory services offered only by duly registered individuals through AE Wealth Management, LLC (AEWM). AEWM and Texas Financial and Retirement, Inc. are not affiliated companies. Investing involves risk, including the potential loss of principal. Neither the firm nor its agents or representatives may give tax or legal advice.  Individuals should consult with a qualified professional for guidance before making any purchasing decisions. 674670