6 Expenses That Today’s Retirees Underestimated

Building the perfect retirement is not easy. Your plan will likely have to carry you through many decades without a steady paycheck.

No matter how diligently you approach the matter, the strategy you settle on will probably be an educated guess at best.

Many retirees begin to realize this truth a few years into retirement. At that point, they can see that while they were on target in estimating some expenses, they underestimated others.

As part of its latest annual Retirement Confidence Survey, the Employee Benefit Research Institute asked more than 1,200 retirees about expenses they underestimated before they entered their golden years.

Following are the most common answers.

1. Health care or dental expenses

Retirees who said this expense is:

• “Much higher” than expected: 13%
• “Somewhat” higher than expected: 25%

Some people mistakenly believe Medicare will cover all their health care expenses during retirement. Others think dental coverage is a part of government-managed Original Medicare, one of the two types of Medicare, the other being Medicare Advantage plans from private insurers.

Both beliefs are false, as many retirees unhappily discover. For more, check out “Medicare Will Not Cover These 10 Medical Costs.”

2. Housing expenses

Retirees who said this expense is:

• “Much higher” than expected: 12%
• “Somewhat” higher than expected: 21%

Very few people are surprised that maintaining a house can be expensive. But these costs are higher than many people expect in retirement.

In fact, housing costs are by far the biggest expense retirees face — nothing else comes close. To learn how to trim this expense, check out “8 Ways to Cut Housing Costs in Retirement.”

3. Taxes

Retirees who said this expense is:

• “Much higher” than expected: 9%
• “Somewhat” higher than expected: 21%

Even in retirement, taxes are impossible to escape. Many people see their tax bills fall substantially in retirement, but that is not true of everyone.

In fact, some people find that their income in retirement is high enough that at least some of their Social Security benefit ends up going back to the government in the form of taxes.

Of course, you can lower this cost by choosing to retire in the right state — such as one of the states that recently cut retirees’ taxes or, even better, one of the states without any income taxes.

4. Travel, entertainment or leisure

Retirees who said this expense is:

• “Much higher” than expected: 8%
• “Somewhat” higher than expected: 21%

Many workers dream of a retirement filled with travel to exotic locations. But once you arrive at the places you have dreamed about, the bills that go with them might resemble something closer to a nightmare.

So, before you begin to trek across the globe, check out the tips from Money Talks News founder Stacy Johnson in “7 Tips for Getting the Best Deals on Travel.”

5. Long-term care

Retirees who said this expense is:

• “Much higher” than expected: 9%
• “Somewhat” higher than expected: 8%

One of the thorniest questions in retirement is how to pay for long-term care, should you need it. Medicare does not cover long-term care, which can be enormously expensive.

Long-term care insurance is one option for covering at least some of the cost, but is it the right option for you? Stacy has tackled this topic too, and you can get his take in “Should I Buy Long-Term Care Insurance?”

6. Supporting or helping a family member

Retirees who said this expense is:

• “Much higher” than expected: 5%
• “Somewhat” higher than expected: 9%

Some retirees have to step up to the plate financially to help aging parents. Others may have to unexpectedly provide money for struggling children, or even siblings or friends.

If you need to spend money to help loved ones, getting professional help might be a wise way to make sure your budget stays on track. So, stop by Money Talks News’ Solutions Center and find a great financial adviser.