Travel back in time to the year 1900, and the average life expectancy in New Zealand was about only 46 years of age. Fast forward to the current day, and we’re living to be, on average, over 82 years old. Kiwi are living longer than ever. We have more time in our lives to experience the world, resulting in more time spent in retirement. Being retired may seem like it’s far off in the future, but in reality, retirement can creep up quickly. It may be easy to assume that you can rely solely on receiving Superannuation and Kiwisaver payments in old age, but retirement sometimes can catch us out with hidden costs. Considering these often unexpected expenses and making a retirement budget can set you up for a comfortable life after turning 65. Read on the uncover the top five hidden costs of retirement.
When people take stock of what's essential to a happy life, having a warm and cosy place to live is commonly high up the list. This means that your housing can be one of the vital costs to consider when you retire. As we already know, housing can be a costly expense, and it could be even more expensive in the future. Here are some of the aspects of housing that could pop up as a hidden cost in retirement:
There’s no avoiding it, we all age eventually. There’s also no getting around the fact that there will be higher medical costs as we get older. You may feel like a spring chicken now, but illnesses are more likely to pop up later and in life (not to mention potentially being a bit more accident-prone too). Some of these health issues can bring hidden costs that may be worth considering when you are actively planning for your retirement.
If you’re skydiving and rock climbing now, you may not still be doing this when you’re retired. In saying that, having an enjoyable lifestyle can be important in your twilight years. You might think you’d just knit all day on an armchair, but in reality, you may want to keep busy doing activities that cost more money. Although they say that the best things in life are free, an enjoyable lifestyle is often a hidden retirement cost that people forget to consider. As the cost of living increases and we go through economic ebbs and flows, lifestyle choices and creature comforts can become significant expenses over time. Here are examples of hidden costs that could affect your lifestyle in retirement:
In old age, it’s common to enjoy quality time with your spouse. One of the great things about retirement can be having time to enjoy activities you both didn’t have time for while working full time. Quality time may be special to share, but you or your loved one will eventually pass away. The loss of someone you love is difficult enough, so the hidden costs of their sudden loss can make life even more difficult. Here are some costs to keep in mind if you were to go through such a loss:
At the start of this guide, we touched on how Kiwi are living longer than ever. The extra years spent with just income from a pension and Kiwisaver means we may need more money saved for retirement than ever before. These extra years are often a hidden expense that people don’t consider. Partner this with the steady increase in the cost of living, and it can all start to feel a bit doom and gloom. But never fear, you'll be just fine by planning for what retirement could bring. Here are a few tools that can help you prepare for the future:
A retirement budget doesn’t need to be scary. Setting yourself up and considering possible hidden costs while you’re young can mean you get the most out of your twilight years. The pension and Kiwisaver are valuable sources of income when you’re older, but sometimes it can be helpful to have a bit extra saved up to account for hidden costs.
Chubb Life has helpful life insurance options to help make sure you and your loved ones are looked after should something happen to you. You can choose from tailored insurance solutions, including Chubb LifeOne® Life Insurance or Chubb Life Assurance Extra Insurance
It’s often good to talk with a Chubb Life Insurance Adviser or Independent Financial Adviser to work out a financial plan for the future and discover the best life insurance option for you. Remember, like a fine wine, we all get better with age.
As we’ve covered already, your health and lifestyle can impact your life insurance premium. Luckily, by leading a healthier life, you can try to help lower your premiums. Consider positive changes like:
If you don’t stick to a regular budget, you can quickly lose track of how much you’re spending. This is not helpful when you’re trying to factor in the cost of Life Insurance. It may be beneficial to take the time to review your expenses to identify areas where you can be smarter with your spending. It’s a lot easier to save money when you create a budget. Otherwise, for more budgeting tips, talk to an Independent Financial Adviser or Insurance Adviser. They will help you choose a premium option that is within your means.
For some, smoking can be a quick albeit hard-fought win. There are plenty of statistics that point to smoking causing future health problems. Quitting smoking could be a double whammy in that you save money on cigarettes and possibly reduce the costs associated with the underwriting process. It may be tough to quit, but many resources are available to help you
Insurance Advisers are there to talk you through the insurance process and provide you with the best options for your unique needs. It can be good to ask your adviser about possible deductions or discounts. If you have multiple insurance policies, they may have some helpful deals.
Just like how you should ask your Insurance Adviser about discounts, it can also be beneficial to assess your current level of cover regularly. Evaluating your level of cover often could make sure that you’re not paying for cover you don’t need. For example, if your kids have flown the nest and are working, changing your cover could be an idea. There are independent online resources available to help you access your current insurance.
For most people, life insurance can provide the freedom to live life worry free. Knowing that your loved ones would be looked after financially if something happened to you can be an empowering feeling. There are varied life insurance options available from a range of suppliers. To make sure you find the best life insurance option for you, it can be helpful to talk to an Independent Financial Adviser or a Chubb Life Insurance Adviser. They can help get you the right level of cover to fit your budget. You can find out more about Chubb Life Insurance options to get started. Remember, it's never too early for life insurance, and it might not be as expensive as you think.
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