These 6 Hidden Expenses Could Derail Your Retirement Plans -- At Least One Could Cost More Than $100,000 Per Year

Key Points

• It's important to have a thorough retirement plan, outlining how much income you'll need and how you'll amass it.

• Be sure to estimate your future spending comprehensively, including the expenses outlined below.

• Remember that there will likely be multiple unexpected expenses that pop up over the years.

• The $23,760 Social Security bonus most retirees completely overlook ›

Planning and saving for retirement is a tricky endeavor, because there are many unknowns -- and luck plays a factor, too. You can't plan for every possible twist and turn in your retirement life, but there are some expenses that many people don't sufficiently consider in their planning.

Here's a look at six hidden or just underappreciated expenses you might face in retirement.

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1. Healthcare costs

You may be assuming that most of your healthcare expenses in retirement will be paid by Medicare, and that may be true. But even if Medicare pays 80% of an expense, if it's a $150,000 bill, that could leave you paying $30,000.

According to Fidelity, a 65-year-old person retiring in 2025 can expect to spend $172,500, on average, on medical and healthcare expenses throughout their retirement. That doesn't even include long-term care, over-the-counter medications, or most dental services. For a married couple, the average total is $345,000.

Healthcare is a major expense category for older (and many younger) people these days. So plan accordingly and make smart Medicare decisions, too. If you can get and stay relatively healthy, you may be able to contain these costs a bit.

2. Housing costs

Then there's housing. We often think mainly about our mortgage or rent payments when we think about housing costs, but it's important to remember that there are lots of related expenses, especially if you're a homeowner.

For example, even if you pay off your mortgage loan before you retire, freeing yourself from those payments, you'll still be on the hook for expenses such as homeowner insurance, property taxes, utilities, repairs, and maintenance. You may even have to pay more, perhaps installing a ramp to your door and/or converting a bathtub into a walk-in shower.

3. Long-term care

Long-term care is a tricky category because the insurance is generally so costly. It's costly because the cost of long-term care itself is costly -- and is often needed. The U.S. Department of Health and Human Services has estimated that 56% of Americans turning 65 now will need long-term care at some point in their retirement.

Per the 2024 Genworth Cost of Care survey, a home health aide costs an average of $77,792 annually, while the median annual cost of adult day care is $26,000. The national median annual cost of a semi-private room in a nursing home, meanwhile, was $111,325.

According to the 2024 American Association for Long-Term Care Insurance (AALTCI) Annual Price Index survey, the average annual premium for a $165,000-benefit policy with no inflation protection is $1,200 for a single male (age 60) and $1,900 for a single female (age 60) -- per year. For married 60-year-olds, the average combined annual premium is $2,080.

So, look into whether buying a long-term care policy makes sense for you. (Note, too, that there are some hybrid life insurance and annuity policies with long-term care benefits included.)

4. Retirement income taxes

Don't forget that even when you're retired, Uncle Sam -- or your state -- will likely still be wanting a cut of your retirement income. So, take some time to research the taxes and tax rates you'll face. Doing so can help in your retirement planning.

Know, for example, that 41 states don't tax Social Security benefits, and 13 states don't tax any retirement income.

5. Inflation

You may not be thinking of inflation as an expense, but it kind of is one. After all, if inflation stays at the long-term average of around 3% over 25 years, your purchasing power could be cut in half. If you've planned for, say, $60,000 in income in year 25 of your retirement, it might only be able to buy what $30,000 buys today.

Keep this in mind, too, as you plan and save for retirement. At a minimum, you may want to amass a significantly bigger nest egg than you originally were aiming for. Retiring with $1 million may not be enough for many people.

6. Your loved ones

Finally, there are your loved ones. They might not be an expense category in your retirement budget, but what will you do if one of your kids or grandkids suddenly needs, say, $10,000 or more -- for a health expense or some critical career training or a down payment on a home?

Keep all these hidden retirement expenses in mind as you develop your retirement saving -- and spending -- plan.

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