Yahoo Finance 7 Retirement Expenses You’re Probably Overestimating, According To Experts
For upcoming retirees, planning for their golden years involves making estimates about what expenses will look like. However, it’s easy to overshoot on certain costs, and many retirees discover their actual spending is lower than anticipated in certain areas.
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To get a more realistic view, GOBankingRates asked retirement experts about the common retirement living expenses that people tend to overestimate. Here are a few areas where you may be pleasantly surprised to spend less than planned.
Housing
Many pre-retirees assume their mortgage or rent payments will continue indefinitely into retirement. However, mortgage-free homeownership is common among retirees. “A good number of retirees find themselves in homes that are already paid off or choose to downsize to more manageable spaces,” said Eliza Arnold, founder at Arnie, a full-service 401(k) provider.
If that’s not true in your case, consider downsizing or relocating to reduce housing costs. “If you’re on the brink of retirement, it’s worth pondering if you really need all that extra space or whether a smaller home in a more affordable locale might be more fitting,” Arnold advised.
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Transportation
Will you need multiple vehicles once commutes and work trips decrease? Probably not, according to experts. “Without the daily grind of commuting to work, transportation costs often dwindle,” Arnold said. “Perhaps it might even be time to consider letting go of that second family car, especially when public transit, with all its senior discounts, becomes a more viable option.”
“For many retirees, buying a new vehicle close to retirement may likely be the last one they buy,” said T. Eric Reich, president at Reich Asset Management, who agreed that retirees tend to consolidate vehicles over time. “Multiple cars tend to narrow to one or two after a while in retirement,” he said.
Clothing
It’s likely your retirement wardrobe needs and expenses will change significantly. Work wardrobes, dry cleaning and frequent new outfit purchases often decline for post-career retirees. Arnold pointed out, “Gone are the days of professional attire and frequent trips to the dry cleaner. Instead, comfort reigns supreme with more casual, versatile outfits.”
You will probably find that your wardrobe in your later years will focus on classic, long-lasting everyday pieces rather than trendy items.
Healthcare
Many retirees worry about huge healthcare costs, but Medicare provides relief on expenses for those 65 and older. “When 65 rolls around, Medicare in the U.S. often comes as a more affordable alternative to some of the pricier health insurance plans we’re used to,” Arnold explained.
Still, supplemental plans may be needed to cover gaps. Reich said, “Many retirees prefer to spend a little more on good supplement plans with a comprehensive RX plan. This eliminates many out-of-pocket costs.” Review your Medicare options thoroughly to find the optimal coverage.
“Long-term healthcare however, remains an underestimated expense,” added Reich.
Food
Dining out and takeout may have been the go-to during your working years. But Arnold said retirees often “rediscover the joys of home cooking. Not only is it often healthier, but it’s also friendlier on the wallet.”
With ample free time, preparing meals at home can become an enjoyable pastime. You’ll also be able to take advantage of senior discounts to treat yourself.
Entertainment
An endless stream of expensive entertainment options may not appeal forever. Local, low-cost and free activities tend to gain appeal, Arnold noted. “It’s surprising how much joy can be found in local, low-cost or even free events,” she said. “From community gatherings to local book clubs, there’s often no shortage of things to do without breaking the bank.”
Focus on free activities like reading, hiking, volunteering and spending time with family and friends. Go to matinee movies, look for discount event tickets and join a senior center to stay active and engaged.
Travel
Is extensive travel around the world your retirement dream? Dreaming about globe-trotting during retirement is common. But you may find your interest wanes after some initial indulgence.
“While it’s the most common desire of retirees, many spend less than they plan to, and tend to lose interest in extensive travel after a few years of doing it,” Reich pointed out.
Be open to more modest regional trips and budget accordingly.
The Takeaway
“The first few years of retirement causes expenses in general to rise but once the novelty of retirement wears off, expenses […] start to decline,” said Reich.
It’s smart to build savings and plan thoroughly for retirement. But also prepare to adjust expectations, as you may find your actual spending is lower than anticipated.
“While inflation can erode buying power for retirees, many of the reduced expenses offset much of those costs,” explained Reich. Enjoy this welcome surprise and embrace simplifying your lifestyle as retirement evolves.
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This article originally appeared on GOBankingRates.com: 7 Retirement Expenses You’re Probably Overestimating, According To Experts
