Content provided by Snappy Kraken
How much will a confident retirement cost you? You may already have a number in mind, but the real total can be higher than most people expect.
While it is true that about 45% of retirees who stop working at 65 may run out of money,1 that outcome is not inevitable. The key is knowing what your retirement savings will need to cover beyond the obvious expenses and making choices that help protect your financial future.
If you are nearing retirement or already in it, now is the time to test your plan against real-life scenarios. Let’s look at some common – but often overlooked – expenses that can quietly shrink retirement savings and ways to help plan for them before they do.
Expenses Many Retirees Overlook
Overspending Day to Day
Spending habits can shift quickly in retirement, and small changes can have a big impact over time. Today, more retirees are feeling the pinch from day-to-day expenses that outpace their plans.
- Nearly 1 in 3 retirees spend more than they can afford—a rate almost double that of 2020.
- Only 59% have at least three months of emergency savings, down 10% since 2022.
- About 36% face unexpected expenses that strain their budgets.
Additional things to watch out for include gradual lifestyle upgrades that increase fixed monthly costs, helping family members without adjusting your budget, and rising costs for essentials like utilities, groceries, and transportation.
The good news? By keeping a close eye on spending patterns and building a flexible budget that includes a cushion for surprises, you can enjoy retirement without sacrificing long-term financial confidence.
Underestimating Healthcare Costs
Healthcare costs can be one of the most underestimated expenses in retirement, especially as prices for care continue to rise year after year. Even with Medicare, out-of-pocket costs for premiums, prescriptions, and uncovered services can quickly add up.
- A 65-year-old retiring in 2024 could expect to spend about $165,000 on health care throughout retirement, not including long-term care.3
- A healthy couple retiring at 65 may see annual costs of $14,500, which could grow to $49,300 a year by age 85 with inflation.4
- In 2023, the average cost of a private nursing home room was $116,800 a year, with assisted living averaging $68,600.5
Additional things to watch out for include long-term care needs that arise suddenly, rising premiums for supplemental insurance, and new diagnoses that require costly treatments. Including realistic healthcare projections in your retirement plan and reviewing them regularly can help ensure that medical expenses remain manageable and that your savings can support the lifestyle you want.
Overlooking Housing Expenses
Housing costs in retirement are not always as stable as many expect. Property taxes, maintenance, and even the costs of relocating can take a larger bite out of savings than planned.
- In 2021, nearly 11.2 million older adults spent at least 30% of their household income on housing, marking an all-time high.6
- This reflects a ~15.5% increase in housing cost burdens for older adults when compared to 2016.6
- Downsizing or relocating often brings added expenses such as moving costs, closing fees, and HOA dues.
Additional things to watch out for include rising utility bills, unexpected home repairs, and insurance premiums that increase over time. Planning for both the predictable and surprise costs of housing can help protect your savings and give you more flexibility to make the living choices you want in retirement.
