Prepare for These Common (Yet Often Unexpected) Expenses During Retirement
Published on July 24, 2025
Is retirement in your sights? As you plan on how you’ll spend your leisure time and cover your typical expenses (such as car payments and/or insurance, mortgage or rent, groceries, etc.), be sure to prepare for the hidden expenses that could derail those carefully laid plans.
Given the high cost of living in the U.S., many workers are challenged to save adequately for retirement, as we detailed in a prior post. Northwest Mutual’s 2025 Planning & Progress Report states that Americans peg the amount needed to retire comfortably at $1.26 million. However, 25% say they have only one year or less of their current annual income put aside. Among Gen Xers, 52% said they have saved three times their current annual income or less for retirement and 54% believe they won’t be financially prepared when that time comes.
In a survey by SeniorList.com,43% of participants said that unexpected bills contribute significantly to financial stress during retirement. Therefore, having a strategy to save enough to live comfortably should include expenses that are not always factored into one’s retirement budget.
Expect the unexpected…expenses
A period of high or persistent inflation, while hard to plan for, puts financial pressure on people whose investments or savings aren’t keeping pace with prices. In the SeniorList study, “inflation and cost of living” topped the stressor list for 28% of retirees, with medical and healthcare expenses right behind at 27%.
Aside from inflation, here are other common yet unexpected expenses to prepare for during retirement.
• Healthcare costs, especially when an acute medical issue or a chronic condition arises. Although Medicare and supplemental health insurance will go a long way to cover insurable medical events, a long stay at the hospital or rehabilitation center, pricey medications, out-of-network providers, or ongoing treatments will soon add up. If long-term care of any kind is needed, those who lack LTC insurance might end up depleting savings to pay for a home health aide or assisted living.
• Emergencies may be unavoidable but the cost of dealing with them isn’t. Accidents, a natural disaster, major home repair, or broken appliance can put a significant dent in the monthly budget.
• Income taxes don’t go away with your W2s because paying taxes is not solely the domain of earned income. Required minimum distributions from retirement plans, Social Security benefits, annuities, and other income streams will all be taxed to some extent. Plan ahead!
• Family issues such as helping adult children or grandchildren who are in a financial bind or caring for a sick loved one or elderly parents can carry a high price tag.
• Aging in place or moving can run up a higher-than-expected tab.
o Staying in one’s home safely may require adaptive or assistive equipment, home modifications or renovations.
o Home repairs and upkeep may become unmanageable, especially if the house is old.
o Moving to a smaller home carries costs that may not have been factored into a typical budget.
o Retirement communities carry high costs that should be well researched before choosing a new home.
• Leisure activities such as travel or hobbies could end up as “stealth” expenses that used to be paid for by work income and now must come out of retirement savings.
Build a strong retirement emergency fund with a self-directed IRA
Don’t be caught with your retirement budget turned upside down—start investing early and often with a self-directed IRA. These tax-advantaged retirement plans enable savvy investors to include a broad array of alternative assets in their portfolios—assets that are not correlated with stock market performance and create a hedge against market volatility.
Self-directed investors can diversify their investments with what they already know and understand, building retirement wealth with real estate, precious metals, private equity funding, cryptocurrency, commodities, and more.
So, while you are developing a reasonable retirement budget based on your goals, you can also take a more proactive approach to planning to fund a comfortable retirement—and cover unexpected expenses that cause nasty surprises for many retirees.
Bonus tip: Taxpayers who have high-deductible health plans can open and contribute to a health savings account (HSA) which can also be self-directed. The contributions offer a triple tax advantage: they go in tax free, grow tax free, and are withdrawn tax free when used for qualified medical expenses. Funds in an HSA may be used after retirement for other expenses besides medical costs.
Don’t hesitate to contact our helpful team with questions about self-directed IRAs and other retirement plans: email New Accounts@NextGenerationTrust.com or call 888.857.8058.
SOURCES (FYI):
https://news.northwesternmutual.com/planning-and-progress-study-2025
https://www.kiplinger.com/retirement/magic-number-to-retire-comfortably
https://www.theseniorlist.com/retirement/costs/
https://www.ruralmutual.com/resource/personal/7-hidden-retirement-expenses-to-avoid/
