When you retire, you’ll have some major expenses…and not just a few, according to Beck & Lenox Estate Planning & Elder Law, LLC. What are the biggest retirement costs often overlooked? 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 have the option to 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 and many people cannot afford the monthly premium.
- Long-term care. This is an expense that Medicare generally doesn’t cover, with very limited exceptions. 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 home for the rest of their lives if they could, according to a 2021 survey by 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 likely also will drop. However, that doesn’t mean your federal income tax bill will fall to $0. You may be taxed on your Social Security retirement benefits in certain situations.
- State income taxes. Like federal income taxes, state income taxes don’t necessarily stop when you retire. Some states also 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 you’re still making payments on your car, owning a car can become an expensive investment for a retiree. You could possibly sell one car if you have two. Even if the car 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 not be able to make the payments, leaving you with the bill. They may also need your money to pay their rent, student loans, phone bills or other expenses. Often, grandparents are supporting grandchildren as well.
- 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 what the next 10, 20 or 30 years will bring.
- A long life. People are living much longer than in the past. This compounds all your expenses.
While you are considering what are the biggest retirement costs often overlooked that will impact you, be sure to consider getting your estate planning in order as well. Estate planning attorneys like Beck & Lenox can provide advice on items like health insurance, minimizing taxes and helping adult children with financial needs. In addition, Elder law attorneys like Rudy Beck, Jay Lenox and Caroline Daiker here at Beck & Lenox can assist those who may qualify for long-term care funds through the government or Veterans Administration.
Reference: Money Talks News (Dec. 14, 2021) “11 Huge Retirement Costs That Are Often Overlooked”