September 16, 2019, Weekly Commentary

Don’t Underestimate These Retirement Expenses

Underestimated costs during retirement can be avoided by careful planning today. Consider these often-underestimated retirement expenses when planning for your future.

Healthcare: Healthcare can be expensive at any age, especially after retirement. One underestimated expense is long-term care (LTC). Roughly 70 percent of retirees will eventually need it – but Medicare doesn’t cover LTC, according to the Department of Health and Human Services. The average person who needs LTC requires it for about three years. At around $81,600 per year, that’s nearly a quarter of a million dollars – out of pocket. And even if you intend to age in place and never need LTC, you might still require home health services.

Housing: Speaking about aging in place, housing is another underestimated expense. Even if you own your home, the peripheral costs of home ownership continue into retirement. One-third of household spending by retiree-age owners is related to housing, including rent or mortgage; insurance and property taxes; renovations and repairs; and maintenance, including housekeeping, food preparation and lawn services.

Transportation: Retirement from your present career may eliminate long commutes, even the need to own a car. But contemporary retirees are much more active and involved than their predecessors. Transportation still plays a role as new careers, hobbies and lifestyles keep older generations vital and connected – and out of the house. It’s possible your transportation expenses will decrease, but perhaps not as much as you anticipated.

Taxes: Taxes are one of the few sure things in life before retirement. You can bet they’ll remain so after you retire. Before, you were taxed on the pay check you brought home from your employer. Now that you’re retired, you’ll be taxed on the “pay check” you bring home – from yourself. Some of your income, like payouts from your 401k or traditional IRA accounts, will be taxed. Your Social Security benefits may also be subject if you have substantial income in addition to your benefits (such as wages, self-employment, interest, dividends and other taxable income that must be reported on your tax return) or if you live in certain states. If you own a home, you’ll still be responsible for taxes assigned to it.

Retirement should be a rewarding part of life. Call our office today; we can make sure your financial plan provides you a path to the future you envision.


Most of Them — The sales of existing homes account for 90 percent of all homes sales in the United States (source: Treasury Department, BTN Research).

How Did You Do? — An average single-family home in America increased in value by 5 percent over the one-year period from June 30, 2018, to June 30, 2019; by 5.9 percent per year over the last five years from June 30, 2014, to June 30, 2019; and by 3.6 percent per year over the last 10 years from June 30, 2009, to June 30, 2019 (source: Federal Housing Finance Agency, BTN Research).

The Most Paid — The maximum Social Security benefit paid to a worker retiring at full retirement age in 2019 was $2,861 per month, more than triple the $899 per month paid 30 years ago in 1989 (source: Social Security, BTN Research)