Editor’s note: Quorum is not affiliated with any of the companies mentioned in this article and derives no benefit from these businesses for placement in this article.
When planning for retirement, you know you’ll need enough money to pay for typical expenses: housing, transportation, utilities, groceries and homeowners or renters insurance, along with auto insurance if you’re going to continue to own or lease a car. You’re also likely considering your retirement tax liability and potential long-term care needs.
But if you want your money to last in retirement, don’t forget to plan for other expenses that often catch retirees by surprise.
1. Enjoying Hobbies
If you daydream about a retirement where you golf daily, make sure you’re factoring that into your anticipated retirement expenses. Sure, most golf courses offer senior discounts, but that savings can quickly be outweighed when you’re playing more frequently than you do today.
Maybe, your ideal retirement consists of exploring one or more new hobbies. Whether that’s tennis, pickle ball, painting, pottery or piano playing, it will likely involve buying equipment and taking lessons so you can really enjoy it.
If you don’t already have a club membership, you might want to apply for one where you can play golf and tennis to your heart’s content. Or the newfound painter in you might want to join an artists’ co-op where you can share techniques or rent studio space.
Exercising your mind and body helps keep you young at heart. You won’t want to be forced to forego your favorite activities in your golden years because you didn’t plan financially for them.
2. Hosting Kids and Grandkids
Speaking of something you love, spending time with family is a priority for most retirees. Do you envision treating your grandkids to adventures to celebrate key milestones or just because? Without planning and budgeting for this in advance, fulfilling that desire could be difficult to afford when you’re on a fixed income.
Even simpler pleasures like hosting your extended family for holidays or during school breaks can stress a retirement budget that’s not ready for the additional groceries, utilities and entertainment that these visits will undoubtedly generate.
3. Financing Travel Plans
Some people hope to buy a recreational vehicle in their retirement to drive across the country, exploring things like the national parks, the biggest cities or the coolest little towns. Others want to travel the globe, visiting foreign lands, enjoying exotic cuisine and experiencing unique cultures. If frequent travel is high on your retirement bucket list, make sure to create an adequate travel budget for the type and frequency of trips you have in mind.
4. Paying for Healthcare
If you hope to retire early, you’ll need to pay for private health insurance until you can apply for Medicare at 65. Moreover, retirees often don’t realize that Medicare doesn’t cover everything, and it isn’t entirely cost-free.
Although Medicare Part A (inpatient hospital coverage) is premium-free for people or the spouses of those who’ve paid into Medicare for at least 10 years, you still pay a sizable deductible for each hospital stay. And as of 2022, Medicare Part B (coverage for doctors’ visits, outpatient care and some other services) includes a minimum monthly premium of $170.10 and a one-time annual deductible of $233.
Some people opt to buy additional coverage through private insurers. This includes Medicare Advantage (Part C) plans, which help pay for your Medicare deductibles, copayments and coinsurance and may include things like dental, vision and hearing care, and Medicare Part D plans to cover prescription medications. Anything not covered by your supplemental plans will come out of your own pocket.
5. Supporting Adult Children
While it’s nice to assume your adult children will be financially independent, the rising cost of living has made this harder to achieve. In fact, Savings.com found that “half of parents with an adult child provide them with at least some financial support.” Its recent survey also contained these staggering statistics:
- The monthly average of parental support is $1,000.
- 19% of adult children receiving parental support are 30 or older.
Given these findings, you may well be confronted with a plea for support from your grown children, even in retirement.
6. 7. and 8. Other Surprising Expenses
Depending on your physical health, cleaning your home, mowing your lawn and handling other routine household tasks can get harder as you age. You may need to hire occasional or full-time help.
Your home will also age, requiring regular upkeep. Experts like Bob Vila advise setting aside 1 to 4% of your home’s value each year to cover its general maintenance and repair costs.
And just like today, the unexpected can happen in retirement. You’ll want the ability to maintain an appropriate emergency fund then as you do now.
Tips for Increasing Your Retirement Savings
No matter where your retirement fund stands, these financial hacks can help you put more into it:
- Adopt budget rules that prioritize savings alongside your needs.
- Contribute the annual maximum limit to your 401(k) and/or IRA account.
- Downsize your home once you’re an empty nester and put the savings toward retirement.
- Buy a home warranty to help cover home repair expenses.
Finally, taking good care of your physical and mental health can help lower your healthcare expenses today and as you age, allowing you to save money for and in your retirement.