Most folks think of the costs they will be able to reduce or eliminate in retirement, including work-related expenses, pricey housing near your job, and multiple car costs. But many of us overlook the costs that can increase in retirement. If we don’t plan in advance for these extra expenses, we could fall short. Here are some areas where your costs could go up in retirement.
[Bookmark the U.S. News Retirement site for more planning ideas and advice.]
Health care. Retirees qualify for Medicare coverage at age 65. But Medicare isn’t free. You’ll still need to pay for premiums, deductibles, and coinsurance. And there are some services most seniors need that Medicare doesn’t cover, such as eyeglasses and hearing aids.
Socializing. Many busy employees do much of their socializing at workplace functions. When you retire you may end up spending more on entertaining guests at your home or meeting former colleagues for lunches out. Work on creating ways to socialize with friends and family that don’t cost a lot.
Household services. Depending on your health in retirement, you might not be physically able to do some activities around your home, such as keeping your home clean, home maintenance, laundry, and yard care. You may need to pay for services to help you keep up with physically demanding activities and maintenance.
Hobbies. Time will be abundant in retirement. You’ll need to find something you enjoy doing in retirement. Almost all hobbies will cost something and many can be expensive. Try to choose a low-cost hobby with a big enjoyment factor.
[See 10 Historic Places to Retire.]
Travel. Many retirees have a pent-up demand for travel that they couldn’t squeeze into their allotted vacation time while working. Once grandchildren enter the picture, you may also want to travel more to visit them. You may end up spending much more on travel costs than you did while employed, depending on how much you choose to travel.
Brian Jaeger is the author of 2million's Personal Finance Blog. For the past 5 years Brian has chronicled his journey to reach his financial freedom goal of a $2 million net worth.