None of us are getting any younger, and every year that passes makes planning for your retirement an increasingly urgent task—a task that’s causing us a lot of collective stress. First there’s the fact that just over half the country even has a retirement account at all. Then there’s the fact that even folks who are actively planning for retirement feel like they’re way behind—and since the median retirement savings is just $87,000, they’re probably right.
You can get a lot of help planning your retirement—from financial advisors to retirement coaches to pre-retirement “stress tests” that can tell you if some of your assumptions are correct. But you can only plan for the stuff you know about, and retirement comes with a lot of potential hidden costs that fly under the radar right up until the moment they take a huge chunk out of your savings. You might have considered the possibility of long-term care needs, you might know that your Social Security is taxed and that you actually have to pay for Medicare coverage—but you probably haven’t considered the following hidden costs of retirement.
Emergency funds
If you’re smart about your household budget, you probably have an emergency fund as a hedge against disaster. But have you factored maintaining (and growing) that emergency fund into your retirement planning? Even if you’re sailing into a comfortable retirement with a fat account and robust assets, disasters can happen, so you’re going to have to keep that lump of emergency cash in place. For example, the average retiree will spend about $157,500 on out-of-pocket medical expenses in retirement (for couples, it’s $315,000). If you haven’t factored unexpected costs like these into your plans you might be faced with either a smaller lifestyle than expected or the frightening possibility of being wiped out by a sudden medical emergency or natural disaster.
Home maintenance
Houses are expensive. If you’re the type to DIY a lot of home maintenance tasks and you’re planning to age in place, you might not include a significant maintenance budget in your retirement plans. But as you get older, your ability to do work around the house might be compromised, and you could find yourself having to pay people to do repairs, landscaping, and upgrades, leading to a sudden uptick in your housing costs. The average homeowner spends about $6,000 a year on home maintenance, so if you’re counting on saving a lot of that by providing your own labor, suddenly having to cover those bills might be a shock to your retirement budget.
Something else to consider: Your house is getting older, too, and so those costs will likely rise over time, even if you were proactive about replacing big-ticket items like the roof or the HVAC system before you retired.
New (or revived) hobbies
Chances are very good you’ll get bored in retirement. Suddenly shifting from having your time taken up by a job to having nothing but free time can be psychologically challenging. In order to fill those empty hours, most people engage in new hobbies—and those hobbies are often quite expensive, and weren’t part of the original spending plan. If you decide to take up golfing, for example, it could cost you up to $10,000 per year. If that wasn’t in your budget, that hobby is going to seriously crimp your retirement.
Inflation
It’s a common mistake, but a lot of folks don’t take inflation into account when planning their retirement. They calculate how much income they can generate, apply a (usually arbitrary) rule about how much they’ll need, and they just plunge ahead. But inflation means everything gets a little more (or, in some years, a lot more) expensive. If you haven’t worked out how to adjust for inflation over time, a retirement income that’s comfortable today will be less so in a few years—and maybe even insufficient a decade or more in the future.
Dental work
Fun fact: Medicare does not cover most dental care, and you can’t even purchase separate Medicare plans to cover dental work. Dental costs in retirement can range from $10,000 for basic needs to over $100,000 for bigger problems, so you’ll wind up either paying for a pricey individual plan or just covering those expenses out-of-pocket. If you’re assuming you’ll have dental coverage in retirement and forgot to factor those costs in, your plans are already undermined.
Your children may need help as adults, too
If you have kids, they’re probably all grown up by the time you retire, so you might assume they won’t cost you anything—and might even be of assistance to you. But there are no guarantees—nearly a third of parents with adult children are supporting their kids, prompting them to cut back on living expenses. If your kids run into financial troubles or life challenges and you have to step up to help them out, your retirement is going to take a hit.
And families tend to grow over time—and every new grandchild and great-grandchild comes with a small but appreciable price tag in terms of gifts and accommodations. You might be more than happy to provide for that, of course—but if you’re not planning ahead for those extra costs, they can mount up considerably.
Home supplies
If retiring means a sudden change from spending 40+ hours a week in an office to spending all your time at home, you need to consider the extra costs involved. Similar to the budget hit people take when they work from home instead of heading into an office, you’ll find yourself spending more on stuff like toilet paper, utilities, and climate control than you’re used to. If your retirement plan assumes your household costs will be roughly the same, you’re probably overestimating how much money you’ll have left over to spend.
IRMAA
You know that Medicare isn’t free, so you’ve planned for that (and maybe a supplemental plan as well). Great! But a surprising number of people aren’t aware of Medicare’s income-related monthly adjustment amount (IRMAA). What this means is that if you earn too much money (over $106,000 for individuals in 2025, and $212,000 for couples) you’re going to get socked with a surcharge on top of the regular Medicare premium. That extra charge can be over $600 per month depending on your specific situation.
No matter how ready you think you are for retirement, if you haven’t considered these hidden costs, you might have some work to do.
