Retirement planning usually focuses on saving money, but there are certain expensive purchases that make more financial sense to buy before you retire. These strategic investments can save you thousands of dollars and major headaches during your fixed-income years.
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The key is, of course, making these purchases while you still have steady employment income and can more easily qualify for financing or handle large expenses. Once you’re on a fixed retirement income, big-ticket items become much harder to afford and finance.
Here are five expensive items that financial experts and retirees consistently recommend buying before you stop working.
Long-term care insurance becomes dramatically more expensive with age, making it one of the most important pre-retirement purchases. According to the American Association for Long-Term Care Insurance, a 55-year-old man pays an average of $950 annually for a policy with $165,000 in benefits, while the same coverage costs $1,200 at age 60.
The numbers get much worse for women due to longer life expectancy. A 55-year-old woman pays $1,500 annually for the same coverage, rising to $1,900 at age 60. By age 65, premiums can reach $2,000-$6,000+ annually depending on coverage levels.
The financial case for buying early is compelling. Nearly 70% of Americans turning 65 will need some long-term care, according to government data. The median annual cost for long-term care ranges from $75,504 for in-home health aides to $116,800 for private nursing home rooms, based on 2023 data.
Long-term care insurance premiums are often tax-deductible as medical expenses, and you can pay them from health savings accounts if you have one. The key is buying coverage while you’re healthy, as medical conditions can make you uninsurable or dramatically increase premiums.
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Major home repairs become much more difficult to afford on a fixed retirement income. The most expensive home repairs can easily cost $10,000 to $50,000 or more, making them budget-busters for retirees.
According to home repair cost data, the most expensive repairs include:
HVAC System Replacement ($5,000-$15,000): Complete HVAC system replacements cost $5,000 to $12,000 on average, with premium systems reaching $15,000+.
Foundation Repairs ($3,000-$25,000+): Foundation problems can cost anywhere from a few thousand dollars for minor settling to $25,000+ for major structural issues.
Roof Replacement ($6,000+): Complete roof replacements average $6,000 for basic materials but can go much higher for premium materials and complex rooflines.
Electrical System Updates ($5,000-$15,000): Rewiring an entire home can cost up to $15,000, while electrical repairs average $318 but can reach several thousand for major issues.
The smart strategy is addressing these issues while you have steady income and can qualify for home improvement loans if needed. Home equity loans and lines of credit are also easier to qualify for while employed. Once retired, qualifying becomes much more difficult with reduced income.
Buying a reliable vehicle before retirement makes financial sense for several reasons. Car loans become harder to qualify for on fixed retirement income, and having transportation problems during retirement can be both expensive and stressful.
The strategy is purchasing a quality used vehicle (two to four years old) that can last throughout your retirement years. This approach avoids the steepest depreciation while getting a car with modern safety features and reliability.
The goal is eliminating car payments during retirement while having reliable transportation. A quality vehicle purchased at age 60-62 can potentially last through age 75+, covering the most active retirement years.
Replacing major appliances before retirement prevents emergency purchases on a fixed income. Quality appliances can last 10-20 years with proper maintenance, making pre-retirement replacement a smart investment.
The strategy is replacing aging appliances proactively rather than waiting for emergency failures. Emergency replacements often mean paying higher prices and accepting whatever is immediately available rather than researching the best value options.
Energy-efficient appliances also provide ongoing savings through lower utility bills, which matters more on fixed retirement income. The upfront investment in efficient models pays dividends throughout retirement.
You can also look into extended warranties for major appliances purchased before retirement. While generally not always the best choice for younger buyers, warranties can provide peace of mind for retirees who want to avoid repair costs and service hassles.
Major dental work and elective medical procedures become much harder to afford in retirement. Dental insurance often has low annual maximums ($1,000-$2,000), meaning extensive work requires significant out-of-pocket spending.
While we’re at it, elective medical procedures also make sense to complete before retirement. While Medicare covers many medical needs, it doesn’t cover cosmetic procedures, and supplemental insurance can be expensive.
The key is working with your dentist and doctor to create a timeline for addressing known issues before you retire and lose employer health benefits.
The optimal timing for these purchases is typically two to five years before retirement. This window provides several advantages:
Income Security: You still have steady employment income to handle large expenses or qualify for financing.
Planning Time: You can research options and time purchases strategically rather than making emergency decisions.
Health Requirements: For insurance products, you can qualify while still healthy and working.
Tax Advantages: Deductions for medical expenses and long-term care premiums provide bigger tax benefits at higher income levels.
Taking advantage of employment-based financing options can significantly reduce costs:
Health Savings Accounts: Use HSA funds for long-term care insurance premiums and medical/dental expenses.
Home Equity: Access home equity through loans or lines of credit while qualifying is easier.
Employee Benefits: Maximize employer health insurance for medical procedures before switching to Medicare.
Credit Access: Secure favorable financing terms while employment income supports applications.
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This article originally appeared on GOBankingRates.com: 5 Expensive Items Everyone Should Buy Before Retiring
