Today’s question is one we help our clients navigate all the time: What expenses might I be responsible for as I enter retirement?

Nicholas J. Colantuono, CFP® joins this week’s Money Wisdom Question Series to explain how you can incorporate these “what-ifs” into your comprehensive financial plan.

Health Care Costs

One of the biggest expenses retirees often face is the rising cost of health care. In addition to monthly premiums, co-pays for routine checkups, and prescription drug costs, unexpected medical needs can lead to significant out-of-pocket expenses. Long-term care is another costly consideration you’ll want to discuss with a financial professional.

This is why it’s crucial to take advantage of HSAs, flexible spending accounts, and other medical savings options while you’re still working and able to save for retirement. Even if you don’t end up needing extensive care, it’s important to have a plan in place for how you’ll manage these potential costs.

Final Expenses

It’s not always easy to think about, but planning for final expenses is essential. This goes beyond just funeral or burial costs – it includes preparing your estate. Basic estate planning can ensure your assets are distributed according to your wishes, cover estate taxes, and tie up any other loose ends, easing the financial burden on your loved ones.

It’s important to view estate planning within the context of your overarching financial plan. To get started, consult with both an estate planning attorney and your financial advisor to ensure all aspects of your final expenses are covered.

Taxes

If you’re like many people we work with, you may underestimate the impact taxes can have on your retirement if you haven’t planned properly. When you’re no longer working or receiving a paycheck with taxes automatically withheld, you might be in for a surprise come tax season.

Whether you’re receiving Social Security, a pension, or taking distributions from retirement accounts, understanding the taxable implications of that income is key. Without careful planning, you could end up owing more than expected on interest, dividends, or other income you hadn’t anticipated.

Health care, final expenses, taxes, and more can all be addressed in a well-crafted retirement income plan. With a tailored strategy in place, you can understand where you stand and how to shape a financial future that leaves nothing to chance.