Retirement Retirement Planning

The 8 Biggest Expenses Most Retirees Underestimate (Don't Repeat These Mistakes)

Don’t let these expenses catch you unaware during retirement.

senior couple sitting on the bench looking at tablet computer
Updated Sept. 24, 2024
Fact checked

We receive compensation from the products and services mentioned in this story, but the opinions are the author's own. Compensation may impact where offers appear. We have not included all available products or offers. Learn more about how we make money and our editorial policies.

You’ve probably spent years saving, researching, and planning for retirement. Perhaps you even found a way to retire early. But what if your expenses in retirement are larger than you expect?

Once retired, we’d all like to feel like our finances are in a good place. After all, you’ve worked your whole life to reach this point.

So whether you’re a recent retiree or planning to be in a few years, here are eight expenses that might surprise you in retirement and how to prepare for them now.

Earn cash back on everyday purchases with this rare account

Want to earn cash back on your everyday purchases without using a credit card? With the Discover®️ Cashback Debit Checking account (member FDIC), you can earn 1% cash back on up to $3,000 in debit card purchases each month!1

With no credit check to apply and no monthly fees to worry about, you can earn nearly passive income on purchases you’re making anyway — up to an extra $360 a year!

This rare checking account has other great perks too, like access to your paycheck up to 2 days early with Early Pay, no minimum deposit or monthly balance requirements, over 60K fee-free ATMs, and the ability to add cash to your account at Walmart stores nationwide.

Don’t leave money on the table — it only takes minutes to apply and it won’t impact your credit score.

Apply for a Discover Cashback Checking account today

Health care costs

Malik E/peopleimages.com/Adobe doctor and senior patient with tablet

Once you retire, you'll likely enroll in Medicare. It is a common misperception that this program will cover all your healthcare expenses during your golden years.

But the unpleasant truth is that people on Medicare still face plenty of out-of-pocket costs. And even if you are in perfect health when you retire, your health costs will likely increase as you grow older.

No one can predict exactly how much your health care will cost in the future, so it pays to prepare to spend more than you might expect today to get ahead financially for tomorrow.

Taxes

WavebreakmediaMicro/Adobe senior couple planning their investments with financial advisor

Being retired doesn’t necessarily mean you no longer have to pay taxes. You might even owe taxes on things such as your Social Security benefit and withdrawals from your 401(k) account.

A little planning can help minimize these taxes. So, consider working with a tax professional or financial advisor who can offer guidance on lowering your tax bill.

Discretionary spending

shurkin_son/Adobe female pensioner in apron

Spending more money than you anticipated on fun activities or hobbies might sound like a good problem. But you could dip deeply into your savings to finance your fun if you're not careful.

Remember, you no longer receive a paycheck every couple of weeks to replenish your savings. So, a little more caution is warranted when spending during retirement.

Create a budget and stick to it now to retire when you want.

Earn $200 cash rewards bonus with this incredible card

There's a credit card that's making waves with its amazing bonus and benefits. The Wells Fargo Active Cash® Card(Rates and fees) has no annual fee and you can earn $200 after spending $500 in purchases in the first 3 months.

The Active Cash Card puts cash back into your wallet. Cardholders can earn unlimited 2% cash rewards on purchases — easy! That's one of the best cash rewards options available.

This card also offers an intro APR of 0% for 12 months from account opening on purchases and qualifying balance transfers (then 19.49%, 24.49%, or 29.49% Variable). Which is great for someone who wants a break from high interest rates, while still earning rewards.

The best part? There's no annual fee.

Click here to apply now.

Children and grandchildren

imtmphoto/Adobe Happy grandparents with grandchild

Just because your children are adults doesn’t mean they no longer need your financial support. Some retirees find their adult children need more financial help than ever before.

And even if your kids are financially secure, you might find it difficult not to spoil your grandchildren.

Being generous with your family is wonderful, but make sure you understand how much you can afford to spend and stay within those limits.

Travel

andreybiling/Adobe happy seniors together having fun at the top of the mountain

Many retirees dream of finally traveling the world. Indeed, if travel is on your retirement bucket list, you’re far from alone.

But the cost of trips can add up. That is especially true if you have family who live in another state or city and you plan to visit them often. Make sure to include those expenses in your budget and look for senior travel discounts.

Home costs

JackF/Adobe disappointed senior female designer examining room

A lot of retirees aim to pay off their mortgages before retirement. It’s an admirable goal and can bring you a feeling of financial freedom.

But even if your mortgage payments end, many housing costs will continue. For example, you might spend more money on home projects during retirement now that you have more time to enjoy your home. And repairs don’t end when you stop working.

Set a realistic monthly budget for home upgrades and necessary maintenance. Make a list of tasks you would like to accomplish around your house and slowly check it off as you can afford to.

Emergencies

hedgehog94/Adobe Couple buying a new dishwasher

Many financial advisors and other money professionals tout the importance of an emergency fund. This can be especially important during retirement when you no longer have a paycheck to cover unexpected costs.

So, make sure to put money aside to prepare for an expensive car fix, broken appliance repair, or computer replacement.

Food

hedgehog94/Adobe senior man at market's checkout paying by debit card

It is easy to spend more on food during retirement, even if you don’t intend to. Costs can add up when you eat at restaurants more often, opt for takeout, or cook new dishes in the kitchen.

Remember to view fancy meals as an occasional treat rather than a regular occurrence. Also, look for smart shopping hacks to help you save on groceries and other necessities.

Bottom line

pikselstock/Adobe happy senior couple at home

Retirement is a time of significant changes, and that includes your relationship to money.

Preparing ahead of time for these changes is crucial. Before you stop working, make sure to avoid wasting your retirement savings so you don't get caught off-guard by the cost of living during your golden years.

Lucrative, Flat-Rate Cash Rewards

5.0
info

Wells Fargo Active Cash® Card

Current Offer

$200 cash rewards bonus after spending $500 in purchases in the first 3 months

Annual Fee

$0

Rewards Rate

Earn unlimited 2% cash rewards on purchases

Benefits and Drawbacks
Card Details