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10 Costs to Include in Your Retirement Budget

By U.S. News & World Report

Retirement bills

You won’t have to pay commuting costs or buy expensive clothes for work in retirement. But you might face new costs as you use more health care services or take up new hobbies to fill your days. Remember to factor these expenses into your retirement budget.

Housing

Housing is likely to be your biggest cost in retirement, but there are also a variety of ways to significantly reduce your monthly housing bills. Paying off your mortgage can eliminate a major monthly expense, leaving only the cost of taxes, insurance and maintenance. Another option is to downsize to a home that costs significantly less and free up home equity to pad your nest egg. A smaller home in a less expensive neighborhood could also reduce your heating, cooling, maintenance and tax bills.

Medicare premiums

Most people don’t pay a premium for Medicare Part A hospital insurance, but Medicare Part B medical insurance charges a standard premium of $121.80 in 2016 — although a few specific groups of retirees pay more. Medicare Part D prescription drug plans charge a separate premium that varies depending on the plan you select each year. And there might be a third premium if you select a Medigap plan that will pay for some of Medicare’s out-of-pocket costs.

Health care

Medicare Part B has a $166 deductible in 2016. After that, you will be expected to pay for 20 percent of the Medicare-approved amount for most of the medical services you use unless you purchase another insurance plan to supplement traditional Medicare. Some preventive care services are covered by Medicare with no out-of-pockets costs, but there are also several types of commonly needed medical services that typically aren’t covered at all such as eyeglasses and hearing aids.

Taxes

After years of deferring taxes on your retirement savings, you will need to pay income tax on each withdrawal from your traditional 401(k)s and IRAs. Part of your Social Security benefit could also be taxable if your retirement income tops a specific threshold. However, there are several ways to strategically withdraw money from your retirement accounts and reduce your retirement tax bill.

Food

You can save money on food in retirement if you are willing to give up expensive convenience foods and take the time to cook healthy meals at home. However, the additional free time you have in retirement might tempt you to spend more on lingering lunches with friends. You may be able to qualify for senior discounts at some restaurants or even at the grocery store.

Emergencies

The need for an emergency fund doesn’t end when you retire. You will continue to need to make home repairs, replace worn-out appliances and fix your car. An emergency fund is essential to avoid spending your retirement savings too quickly. You don’t want to disrupt your retirement draw down strategy every time something breaks.

Entertainment

Your newfound free time in retirement provides opportunities to try new things, but those new experiences can get expensive. Fortunately, deals for seniors abound, such as discount admission to museums and movies, and some colleges offer low-cost classes for retirees. Many communities provide plenty of free or affordable entertainment to people of all ages, ranging from summer concerts to library seminars.

Travel

Retirees finally have time to travel as much as they want. The only limiting factor is your budget. Senior citizens and AARP members often enjoy discounts on hotels and rental cars. There are also creative ways to travel affordably if you’re willing to stay with friends or swap homes with someone else. Retirees have the advantage of being able to travel during weekdays and off-peak times, which could save you money and help you avoid crowds.

Grandchildren

Nothing can throw off a retirement budget quite like the arrival of a grandchild. Grandchildren can change your financial priorities. Some grandparents like to lavish gifts on their grandchildren, travel to see them frequently, help provide child care or set up a trust to help provide for their future. Each of these scenarios can significantly change your retirement budget.

Leaving a legacy

Some retirees would like to leave financial gifts to their children, grandchildren or other heirs or pass on treasured items such as jewelry, furniture or other heirlooms. You might want to write a memoir or curate family photos. Make sure your wishes are clearly spelled out in writing so that your plans can be realized.

More from U.S. News

10 Costs You Can Eliminate in Retirement

10 Ways to Get Ready for Retirement After Age 50

10 Alternatives to Full-Time Retirement

10 Costs to Include in Your Retirement Budget originally appeared on usnews.com

Don’t Settle for Student Loans to Pay for Online Education

By WTOP Staff
Online college programs are becoming a more popular choice for prospective students, with one study finding that more than 6 million students enrolled in at least one online course in fall 2015. The popularity of these courses can be attributed in part to their flexibility with working adults' schedules, students' ability to progress more quickly through online programs and, oftentimes, cheaper tuition. [See 10 low-cost online bachelor's programs for out-of-state students.]Online degrees can be beneficial to many college students, but some studies have shown online learners complete their programs at lower rates than students at traditional brick-and-mortar campuses. Individuals with student loans but no degree comprise two-thirds of defaulted borrowers. Though these numbers are not encouraging, just like for traditional programs, there are ways to reduce how much you'll need to borrow for an online program to ensure you won't become one of these statistics. Don't just settle on borrowing student loans to cover the whole cost of your program and living expenses. Instead, start thinking about how to cut costs and cover your balance in different ways, such as the following. -- Grants and scholarships: Even though you are taking an online course, you can still apply and receive grants and scholarships. But your first step should be to complete the Free Application for Federal Student Aid, commonly referred to as the FAFSA, which will allow you to receive a Pell Grant if your expected family contribution is low enough. The EFC criteria and award amounts are adjusted annually, but the 2017-2018 academic year awards range from $606 to $5,920, which could significantly lower the amount you borrow annually. Your next step is to apply for scholarships. You can start by checking online scholarship search engines, such as the Salt Scholarship Search, College Board's BigFuture and Peterson's. But don't forget to take advantage of local organizations and your school's financial aid office. Both may offer scholarships that you can't find with a national scholarship search. [Review these 10 sites to kick off your scholarship search.]For instance, organizations like the Elks Club, Knights of Columbus or the Rotary Club typically offer scholarships annually to local students. Just because you're going to school online doesn't mean you're ineligible. Visit your local library for scholarship listings, and ask around town. You might be surprised how many local organizations offer scholarships. While these scholarships typically aren't large, every little bit counts. Each dollar you receive in a scholarship is a dollar you don't have to borrow and pay interest on. -- Work-study: Another option for online students may be work-study awards. Not all students enrolled in online programs are eligible, but students at some schools -- including, for example, SUNY Empire State College and Liberty University -- are. Work-study awards are not given upfront like scholarships and grants. In most cases, they are an offer to earn up to the awarded amount if you secure an eligible work-study job. While there is a misconception that all work-study jobs must be on campus, students can work for off-campus, nonprofit or public employers as long as the work is in the public's interest. You may be able to work for a for-profit employer if the job is relevant to your course of study. No matter who the outside employer is, it will need to have an established agreement with your college for you to receive work-study funds. Remember, to be eligible for federal financial aid, you must be enrolled and pursuing a degree or certificate. If you're not working toward a credential, Pell Grants and work-study won't be option, but you may still be able to take advantage of private scholarships -- just be sure to read the eligibility criteria carefully. [Explore what to know about financial aid in online programs.]-- Pay as you go: One of the great benefits to enrolling online is the flexible schedule, which can allow you to complete your college coursework around your responsibilities. But prospective students often overlook using their part- or full-time job earnings as an option for paying for college. Almost 80 percent of college students in 2015 worked at least part time while attending classes, according to the National Center for Education Statistics. By budgeting and thinking strategically about your college costs, you can likely reduce your dependence on student loans by paying a portion out of pocket. Many -- but not all -- online programs are less expensive than traditional programs and often have shorter payment periods. Six, eight or 10 weeks are common course durations. Because of the frequency of payments in an online setting, you may be well-placed to pay as you go and possibly avoid borrowing altogether. Attending college online and avoiding student loans may be challenging, but if you are willing to put in the effort, you can limit the amount you need to borrow. More from U.S. News Q&A: Understanding Student Loan Discharge Eligibility Student Loan Refinancing Isn't Right for All Borrowers
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