When you retire, you’ll have some significant expenses. Money Talks News’ recent article entitled “11 Huge Retirement Costs That Are Often Overlooked” details some retirement costs that people often forget to figure into their financial calculations.
- Health insurance. With Medicare in retirement, you should know that there can be recurring costs like premiums and deductibles, which tend to rise each year. Some seniors can buy a supplemental Medicare health insurance plan, also known as a Medigap policy, to cover some out-of-pocket costs. However, a Medigap policy is still an expense in itself.
- Long-term care. This is an expense that Medicare generally doesn’t cover. Unless you bought a long-term care insurance policy, you might have to cover the cost of long-term care yourself if you need it.
- Home renovations. About 82% of seniors would stay in their current homes for the rest of their lives if they could, according to a 2021 survey by the American Advisors Group. Known as “aging in place,” this has costs. It could include doorways that may need to be widened for wheelchair passage, a bedroom added to the main floor, or a bathroom renovated to accommodate the limited mobility that often comes with advanced age.
- Federal income taxes. If your income decreases when you retire, your taxes will likely drop. However, that doesn’t mean your federal income tax bill will fall to $0. This is because even Social Security retirement benefits are taxable in certain situations.
- State income taxes. Like federal income taxes, state income taxes don’t necessarily stop when you retire. Some states tax Social Security benefits and many states tax certain other types of retirement income to some level.
- Transportation. If you drive an older model vehicle or still make payments on your car, owning a vehicle can become an expensive investment for a retiree. You could sell one car if you have two. Even if the vehicle is paid off, you’ll save on insurance and other ongoing costs. You could also start using public transportation if it’s available.
- Travel. Having the free time to travel is a fantastic retirement perk. However, that travel can come at a cost, even with the senior discounts.
- Needy adult children. Some adult children return home to live. However, your children might ask you to co-sign loans and then bail on the payments, leaving you with the bill. They may also need your money to pay their rent, student loans, phone bills, or other expenses.
- Entertainment. Musicals, plays, and other live performances are not inexpensive. American households led by someone age 65 or older spent an average of $302 on entertainment-related fees and admissions in 2020.
- Inflation. You must plan for the next 10, 20, or 30 years.
- A long life. People are living much longer than in the past. This compounds all your expenses.
Reference: Money Talks News (Dec. 14, 2021) “11 Huge Retirement Costs That Are Often Overlooked”