Retirement is something that millions of people start thinking about decades in advance. We start with a 401K or IRA account. Next comes the home and a few other tangible assets. We might even play around in the stock market a little.
You’ve covered all the bases and set yourself up to live comfortably without a regular paycheck. As those golden years get closer, you’ll probably start to feel like the 62% of people who believe they’re saving enough for retirement.
However, despite planning for years and thinking through all of the possible costs, there’s a good chance a few retirement expenses might still sneak by you. Here are some of the lesser-known expenses that can really add up in retirement.
(Non-Medical) Insurance Expenses
Medical insurance is at the top of people’s mind when they plan for retirement. The careful planning is warranted given the rising cost of medical care. But that’s only one type of insurance you may need.
Life insurance will only get more expensive the older you are. Waiting until retirement to get coverage could end up costing more in the long run.
It’s not a topic that people like to think about, but funeral expenses are a cost that few retirees consider at all. If people knew how burial insurance works and how it protects family from financial hardship more people who work it in their retirement budget. It’s an absolute must if you don’t have life insurance.
Getting around to all those retirement resorts and visiting family requires auto insurance if you plan to drive. But don’t count on it being the same price when you’re older. Budget for an increase in the monthly premium. Rates for drivers who are over 70 are going to be similar to the rates paid by drivers who are under 25.
Transportation Alternatives and Programs
Too many seniors make the mistake of thinking they’re going to drive forever. The reason auto insurance goes up with age is because seniors are more likely to get into an accident.
Failing eyesight and slower reflexes can make driving dangerous past a certain age. That’s when you may need to pay for transportation alternatives or a program like Independent Transportation Network (ITN). Most of the programs are membership-based, which helps make the expense more predictable.
Uber and Lyft are also available in most areas for one-off trips. It’s cheaper than using a taxi, but rides typically cost $10 or more each way.
Property Tax Hikes
Even if you paid off your house years ago, you may find yourself paying more down the road than you do today. An increase could come in the form of higher property taxes.
Property can be assessed each year to determine the taxable value. When the value goes up so do the taxes. However, some states offer property tax exemptions for senior citizens. There are also postponement programs in some states. It’s a little relief, but account for higher property taxes in your retirement budget to play it safe.
As we age and our physical capabilities change, our homes can become less safe. Staying in your home during retirement may require that certain modifications be made.
Falls are the leading cause of injury and death for people over 65 years old. Staircases and bathrooms are two of the biggest hazards for seniors. Years into retirement you may find you need to install a walk-in tub, or a stair lift may be needed if the master bedroom is on the second floor.
If you haven’t already converted to an aging in place design it’s something that needs to be factored into the retirement savings.
Still think you’ve saved enough for retirement? Take another look at the budget to make sure you’ve accounted for the expenses above.