Retirement Costs People Forget
A new analysis highlights three commonly forgotten retirement expenses that can strain budgets: rising healthcare needs including dental and vision, housing maintenance and repairs, and long-term care costs. Even with Medicare or supplemental insurance, out-of-pocket medical and home-related expenses can easily total thousands per year. Experts urge including these in projections to avoid shortfalls.
- A 65-year-old who retired in 2025 can expect to spend an average of $172,500 on health care and medical expenses throughout their retirement, not including long-term care. - Even with a paid-off mortgage, housing remains a significant expense; a common guideline is to budget 1% of the home's value annually for maintenance and repairs. For a $400,000 home, that amounts to $4,000 per year. - The national median cost for a private room in a nursing home was approximately $127,750 per year in 2024, while an assisted living facility cost about $70,800 annually. - Inflation can significantly diminish savings; over 30 years, an item costing $1 today would rise to $2.43 with 3% inflation, but to $3.24 with 4% inflation, requiring significantly more savings to maintain purchasing power. - Medicare does not cover all healthcare costs; on average, it covers about two-thirds of expenses, leaving retirees to pay for roughly 22% out-of-pocket, not including premiums. - Transportation is the second-largest expense category for retirees, costing an average of $9,033 per year. - Taxes can be an unexpected cost, with potential 25% penalties for missing required minimum distributions (RMDs) from retirement accounts. - Beyond major expenses, retirees often find their spending on travel and hobbies is higher than they had anticipated before retiring.
