Saving for Retirement? Don’t Fall into these Money Pits

Are you financially ready to face the retirement years? According to the Genworth 2016 Cost of Care Survey, long term care costs have risen. Here are some annual figures revealed in the study:

Home Health Care (Home Health Aide) Cost: $46,332

Adult Day Health Care Cost: $17,680

Nursing Home Care (Private Room) Cost: $92,378

With the average cost of long term care insurance (LTCI) a steep price for most, it is of high priority for those preparing for retirement to start saving money. To help you out, let’s list down several money pits for you to avoid when planning for your future:

One More Bottle for the Road, (another) Last Stick to Smoke

Making the most out of life doesn’t mean going out late at night to all those parties, binging on alcohol, or smoking packs of cigarettes. As fun that these activities may be, it can also be an expensive way to live. Not to mention, there is also a heavy toll on one’s health that can prove to be a significant expense.

As mentioned by Fair Reporters, the average cost for a pack of cigarettes in the country is $5.51. Regardless of how many packs a smoker consumes, you can still see that it is a costly vice. Liquor prices vary (depending on the type, such as whiskey, rum, beer, etc.). But the same cigarette perspective can be done – regardless of the price, costs add up, taking a big chunk out of potential retirement savings.

Also, the consequences of these taking these vices on one’s health is damaging. According to the Centers for Disease Control and Prevention, cigarette smoking is the leading cause of preventable disease and death in the country. Treatment for lung cancer and alcohol-related diseases are expensive. Worst, retirees who partake in these vices may find it hard applying for medical coverage, with smokers and alcoholics as possible qualification deterrents for insurance policies.

The bottom line is, would you risk your retirement plans for vices that grant temporary pleasures? Or spend hard-earned cash on activities that you’d likely to regret in the future? Instead of spending for vices, why not spend for something beneficial to your health?

The Trap We Call Kids (or Grandkids)

When was the last time you said “no” to kids? As harmless as it may seem, but continuously giving in to children’s demands for cash can burn a hole in your pocket. The problem magnifies when children grow up – according to Larry Stein of Disciplined Investment Management, most retirees find it hard to cope with expenses, even with cash set aside for the golden years. The main reason why this is so is that most still support their children or grandchildren financially –an expense that isn’t initially included in any retirement plan.

There is nothing wrong helping out your family’s financial problems. But like vices, costs add up, which can result in bigger problems for both the elderly and their children. Avoid this trap by prioritizing and setting aside a budget for your children, in case you do need to contribute to any of their expenses. Best of all, consider alternative options – helping out kids doesn’t necessarily mean for you to pay cash (for example: you can opt to look after your grandchildren, instead of contributing money for a babysitter).

Giving in to Your Emotions

The reason why financial experts and insurance specialists stress the importance of writing down a plan is that it helps people enforce the idea of accomplishing a goal. With that said, it is also of equal importance to set your mind to stick to your plan. By prioritizing your emotions over your plan, you’re basically stretching milestones to a later date. Worst, you may end up accomplishing nothing at all.

To help you save money and commit to a plan, always make sure to think twice before making a purchase. Do you really need to travel overseas for vacation? Is lunch at that new café worth your daily spending budget? Do you really like that red blouse? Are you buying a new phone because you need one, not because everyone’s buying a new gadget?

Thinking beyond than what you’re feeling right now will help you prevent making impulsive decisions. Having a firm and practical mindset will also reward you in other aspects of life. You may potentially have a simpler and grounded view of life – you’ll start to value experiences over material possessions, seeing the bigger picture over temporary delights.

Delaying Long Term Care Insurance

Long term care premiums may have risen, but delaying the purchase of a policy may prevent you from enjoying the golden years. An LTCI plan provides excellent and appropriate care in case you need it. And chances are, you’d definitely need one, with 70% of individuals at the ages of 65 years and above expected to receive care during retirement.

Also, don’t let the average cost of long term care insurance turn you off from making a purchase. According to a recent study conducted by America’s Health Insurance Plans, approximately 90% of long term care insurance policyholders are satisfied with their policy purchases. This finding proves that an LTCI is an essential tool to have for the retirement years.

Avoiding the money pits mentioned above will help you secure your finances. Do you have other saving suggestions? Please share it with us below.