Eight Hidden Costs That Could Hinder Your Retirement
None of us are getting any younger, and with each passing year, planning for retirement becomes an increasingly pressing task—a task that causes us a lot of collective stress. First is the fact that just over half the country has a retirement account at all. Then there’s the fact that even people who are actively planning for retirement feel like they’re falling far behind —and since the average retirement savings is just $87,000, they’re probably right.
You can get a lot of help with your retirement planning, from financial advisors to retirement coaches to pre-retirement ” stress tests ” that can tell you whether some of your assumptions are correct. But you can only plan for what you know, and retirement comes with many potential hidden costs that go undetected until they take up a huge portion of your savings. You may have considered the possibility of needing long-term care, you may have known that your Social Security is taxable and that you’ll actually have to pay for Medicare coverage, but you probably haven’t considered the following hidden costs associated with retirement.
Emergency funds
If you manage your household budget wisely, you probably have an emergency fund as insurance against disaster. But have you considered maintaining (and growing) this emergency fund in your retirement planning? Even if you retire comfortably with a fat account and safe assets, disasters can happen, so you’ll have to keep that pile of emergency money in place. For example, the average retiree will spend about $157,500 on medical expenses in retirement (for couples it’s $315,000). If you haven’t factored such unexpected expenses into your plans, you could be faced with either a lesser lifestyle than expected or the frightening possibility of being wiped out by a sudden medical emergency or natural disaster.
Home care
Houses are expensive . If you like to do a lot of DIY home maintenance tasks and plan to age in place, you may not be including a significant maintenance budget in your retirement plans. But as you get older, your ability to do housework may be compromised, and you’ll have to pay people to do repairs, improvements, and upgrades, causing your housing costs to suddenly rise. The average homeowner spends about $6,000 a year on home maintenance , so if you’re expecting to save a significant portion of that money through your own workforce, suddenly having to pay those bills could be a shock to your retirement budget.
Something else to consider: Your home is aging, too, and so these costs will likely add up over time, even if you’ve been proactive in replacing big-ticket items like your roof or HVAC system before retirement.
New (or revived) hobbies
There is a very high chance that you will become bored in retirement . The sudden transition from working to having nothing but free time can be mentally challenging. To fill these empty hours, most people take up new hobbies – and these hobbies are often quite expensive and were not part of the original spending plan. For example, if you decide to take up golf, it could cost you up to $10,000 per year . If it wasn’t in your budget, this hobby will severely limit your retirement.
Inflation
It’s a common mistake, but many people don’t take inflation into account when planning for retirement. They calculate how much income they can make, apply a ( usually arbitrary ) rule as to how much they’ll need, and just charge ahead. But inflation means everything gets a little more expensive (and in some years, a lot more expensive). Unless you’ve figured out how to adjust for inflation over time, a retirement income that’s comfortable today will become less comfortable in a few years—and perhaps even insufficient a decade or more into the future.
Dental work
Fun fact: Medicare doesn’t cover most dental care , and you can’t even purchase stand-alone Medicare plans to cover dental care. Dental costs in retirement can range from $10,000 for basic needs to over $100,000 for more serious issues, so you’ll either have to pay for an expensive custom plan or simply cover those costs out of pocket. If you assume you’ll have dental insurance in retirement but forget to factor in these expenses, your plans are already ruined.
Your children may need help as adults.
If you have children, they will likely be grown by the time you retire, so you can assume they won’t cost you anything and may even help you. But there are no guarantees —nearly a third of parents of adult children support their children, prompting them to cut back on living expenses. If your children encounter financial problems or life problems and you have to help them, your retirement will suffer.
And families, as a rule, grow over time, and each new grandchild and great-grandchild comes at a small but tangible price in the form of gifts and accommodation. Of course, you may be more than happy to budget for this, but if you don’t plan ahead for these additional costs, they can add up significantly.
Household goods
If retirement means a sudden transition from spending 40+ hours a week in the office to spending all of your time at home, you’ll need to consider the additional costs that come with it. Just as people lose budget when they work from home instead of going to the office, you’ll find yourself spending more on things like toilet paper, utilities and climate control than you’re used to. If your retirement plan assumes your household expenses will be about the same, you’re likely overestimating how much money you’ll have left over for expenses.
IRMAA
You know Medicare isn’t free, so you’ve planned for that (and maybe a supplemental plan, too). Big! But a surprising number of people are unaware of the Income Related Monthly Medicare Adjustment Amount ( IRMAA ). This means that if you make too much money (more than $106,000 for individuals in 2025 and $212,000 for couples), you’ll have to pay an additional fee on top of your regular Medicare premium. This additional fee could be over $600 per month depending on your specific situation.
No matter how prepared you are for retirement, if you haven’t accounted for these hidden costs, you may have some work to do.