Planning to retire? Here’s a list of at least 14 things to account for first

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Retirement requires an enormous amount of planning, affecting not only how much money to put aside for old age but how to spend and maintain it.  

Retirement Tip of the Week: When planning for retirement, especially if you plan to retire soon, make a list of expenses you expect to have — as well as any other variables that will affect your financial picture. Compare it to your income.  

Anything can happen in retirement, especially since for many of us this chapter of life could span decades. Near-retirees know they need to spend money on the basics — housing, utilities, groceries, medicine — but preparation far exceeds those figures. The small details are what can make or break a comfortable old age. 

Budgeting isn’t for everyone — some people don’t like to be restricted to a certain amount of money for expenditures like clothes shopping, subscription services or takeout dinners. Others may be too focused on the dollar figure, and not enjoy the lives they built. Still, having a rough estimate of what expenses to expect in retirement, and knowing if it aligns with income in retirement, is critical. 

Those who do not like to budget should jot down some expectations for this chapter instead. 

Here’s a list of important factors to account for when budgeting for retirement to get started, inspired by planning tools created by financial planning company NewRetirement. (The tools, which include calculating retirement income, withdrawals and Social Security strategies, are available in partnership with MarketWatch on MarketWatch’s website.)

Have a question about your own retirement concerns? Check out MarketWatch’s column “Help Me Retire” 

MarketWatch also has its own tool to help narrow down where to retire, which features inputs for taxes, lifestyle choices and climate conditions. 

See MarketWatch’s tool: What’s the best place for me to retire?

First, it’s important to know what money you’ll have to spend. Here’s an abbreviated list to help collect that information. 

  • Retirement savings and investments 
    • Ask how that money will be distributed (monthly? annually?) and what percentage of the portfolio will be withdrawn every year.
  • Social Security, including when to claim and how that will affect benefits 
    • For an estimate of retirement benefits, individuals can register with the Social Security Administration (which would also allow them to check their work history is correct and prevent fraud with their accounts). 
  • Pensions, annuities and other retirement benefits for individuals and their spouses
  • Any other potential income in retirement, including rental properties, side gigs and inheritances (though the latter should not be relied on as it is subject to change) 

Also see: Will Medicare pay for my ambulance ride?

Then, run down the list of what expenses you can reasonably expect to pay for in retirement. Here are a few big-ticket considerations to get started: 

  • Housing, including mortgage payments or rent (as well as potential rent increases) 
  • Medical expenses 
    • Healthcare only gets more expensive as a person ages, and the cost of healthcare has continued to rise every year (and will do so indefinitely, according to Fidelity Investments
    • Also incorporate health insurance premiums, be it for Medicare services or a policy prior to age 65 
  • Food, including groceries and dining out 
  • Transportation 
  • Taxes
    • This is a huge area for retirees, and stretches beyond income taxes for federal, state or local municipalities. Taxes also impact real estate, Social Security checks, pensions and investment withdrawals. Know how your property and income will be taxed.
  • Vacations, hobbies and leisure expenses 
  • Clothing
  • Pets 
  • Gifts and any financial assistance to family members for education or other major purchases as well as charitable donations
  • Debt management, including on a mortgage, credit card and student loans 

In order to estimate retirement expenses, think in annual or five-year increments and budget based on what phase of retirement you’ll be in, such as the transition to retirement and “later retirement,” NewRetirement suggested. Also remember that these expenses will fluctuate — Americans tend to spend less on clothes and transportation as they age, but healthcare and housing will likely remain the same or increase, the BLS found. 

Want more actionable tips for your retirement savings journey? Read MarketWatch’s “Retirement Hacks” column

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