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5 surprise retirement costs

Some expenses will go down, but others may sneak up on you. Here's how to plan.

By MSN Money Partner Jun 29, 2011 5:10PM

This post comes from Emily Brandon at partner site U.S. News and World Report.

 

You may be able to reduce or eliminate some expenses when you retire, including your mortgage, commuting costs and office attire. But you are also likely to encounter new costs in retirement that you may be unprepared for.

 

Here are five expenses that may appear suddenly or significantly increase from their current levels in retirement:

 

Medical expenses. Health care is likely to be one of your largest and most unpredictable retirement expenses. It's difficult to determine exactly what medical conditions you might acquire and how much care or medication you will require to treat them.

Start by estimating your annual Medicare premiums and likely out-of-pocket costs, including deductibles, co-pays and co-insurance. Purchasing a supplemental insurance policy that fills in some of the gaps in traditional Medicare coverage can help make retirement health care costs more predictable.

 

Home maintenance and repairs. Like you, your home will continue to age throughout your retirement. Try to take care of foreseeable major repairs before you retire to avoid sudden unexpected costs.

 

You will continue to need an emergency fund in retirement in case your roof leaks or your washing machine breaks down. You may also need to hire additional help with household chores if you become unable or unwilling to clean, shovel snow, maintain your yard, or perform other physically demanding tasks. Post continues after video.

Your children and grandchildren. Your adult children might want to move back in with you after college or a job loss. And when grandchildren appear on the scene, you might want to pay for visits to see them more often or gifts for birthdays, graduations and holidays.

 

Taxes. Many workers with 401k plans have been delaying paying income tax on a portion of their earnings for decades. In retirement, the tax bill will become due each time you make a withdrawal. And distributions from traditional 401ks and IRAs become required after age 70½. To lower your retirement tax bill, consider prepaying the income tax on some of your retirement savings using a Roth 401k or Roth IRA.

 

Entertainment. You will have eight or more extra hours to fill each day in retirement. You may encounter new costs associated with an expensive hobby, such as joining a golf club. Or you may find yourself having more lunches out than you did while working in order to socialize and get out of the house. Many recent retirees also have a pent-up demand for travel. Make sure you factor travel and entertainment expenses into your retirement budget. (Are you saving enough for retirement? Use MSN Money's calculator.)

 

More on U.S. News and World Report and MSN Money:

5Comments
Jun 29, 2011 8:56PM
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Wow.  Could someone please point out to me why this article is even valid?  Which of these 5 points is the surprise?  If you are surprised by any of this you're an idiot.  This is all common sense.  Most of us have to deal with these already.  So are you saying that people in America think that everything is going to magically change when they retire?  Doctors are no longer necessary, houses stand still in time, grand-children get jobs out of the womb, the government stops taxing you, and you are always busy with something free.  This artcile fails.

Jun 29, 2011 11:10PM
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LOL... okay... you two beat me to it!!... what a crock!... and the one about grandkids is hilarious... I'm pretty sure my kids will be way done having kids before I retire... I'm close... Expenses like joining a golf club???... lol... aren't we all members already?... oh... funny article... maybe the author should try writing comedy...
Jun 30, 2011 10:18AM
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Many people do not realize it until they are living it but health care costs in retirement become your #1 expense. Medicare only covers roughly 51% of costs and the remaining comes out of your own pocket. HealthView Services, www.hvsfinancial.com, paints a perfect picture of your future #1 expense:


Male. Age 60. Healthy. Lives in Ohio (national average HC costs). Makes less than $85k/year. Retires at 65. Will live to 90. Wants full coverage (Medicare A, B, D, gap / advantage, dental, etc). --- He can expect to pay just over $360,000 out-of-pocket throughout the course of retirement.


But nobody tells you these things. Advisors, planners, etc. Nobody!


$360,000 is $14,400/year or $1,200/month!


Are your taxes that high? Food costs? Vacations? NO!


Plan for something you actually need but if you'd rather take your trips to never never land instead of being healthy, thats entirely up to you.


Check out our site to educate yourself and ask your advisors what they are doing for health care!


-HealthView Services

Jun 29, 2011 11:55PM
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Five surprise life expectancies, 1) in life you get older, 2) retirement is likley unless you die prior to that, 3) retirement is not the same for all, 4) caution, getting old is testament to your ability to navigate the trials of life and take responsiblity for your life, and finally, 5), caution, living is hazardous to your life..........
Jun 29, 2011 10:42PM
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I had to laugh when I saw your post.  You are exactly correct. I was smiling when I read this thinking that "this" is news?  If anybody was informed by this they are living under the rock and likely need progressive car insurance. 

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