Learn and Plan | Planning for unexpected retirement costs
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Planning for unexpected retirement costs

Aug 23, 2022, 1:17:07 PM | Reading Time: 4 minutes

When you picture retirement, you may envision a dream vacation, visiting friends and family, or learning a new hobby. Having the financial freedom to pursue these goals takes proper planning. But what about the unexpected expenses of retirement? As you budget for future spending, be sure to consider these common retirement costs.

Overlooked health care costs

Among retirement expenses, health care costs are often the most unexpected budget buster. With the average couple over age 65 expected to spend $315,000 on healthcare alone1, it’s important to consider ways to cover these costs beyond traditional retirement income.

For example, some life insurance policies may offer accelerated death benefits that can provide access to a portion of a policy’s death benefit during your lifetime should you be diagnosed with a qualifying illness.2 Fixed index annuities are another option and can help provide growth potential along with a guaranteed stream of income payments for as long as you live.

Medicare costs

A common misconception is that Medicare will pay for all your health care needs in retirement when in actuality, it likely won’t cover all your costs. Some of the items not covered by Medicare include most dental care, hearing aids, and dentures.3 You have the option to buy a supplemental Medicare health insurance plan called Medigap, but this supplemental policy will cost a monthly premium.

Long-term care

You likely don’t picture long-term care when you think about retirement, but it is a reality you will want to consider. Someone turning 65 today has almost a 70% chance of needing some type of long-term care services and support in their remaining years.4 Unfortunately, Medicare and most health insurance plans do not cover long-term care, even if it’s provided at home, in an assisted living facility, or in a nursing home.

Home renovations

Many retirees are choosing to stay in their current homes, especially if they’ve worked hard to pay off the mortgage or if they enjoy their neighborhood and community. As you get older, you may find you need to make your house more aging-friendly, including modifying your stairs, hallways, flooring, kitchen, and bathrooms to be more accessible. These types of renovations will likely require licensed contractors, with the cost varying depending on the size of the project.

How to budget for retirement

On a positive note, people are living longer than ever before; giving them the opportunity to spend more time with loved ones and enjoy retirement. However, with these added years, you’ll need your savings to stretch even further and cover the unexpected expenses that may arise along the way. Consulting with your financial professional as early as possible can help you be better prepared by creating a retirement budget that factors in your desired lifestyle, planned and unexpected expenses, and sources of retirement income. You’ll be able to review your options together and create a financial plan that ensures your retirement savings match your goals and can cover any unplanned expenses on the horizon.


1. Source: MarketWatch. May 19, 2022.

2. Accelerated Death Benefits are subject to eligibility requirements. The death benefit will be reduced by the amount of the death benefit accelerated. Since benefits are paid prior to death, a discount will be applied to the death benefit accelerated. As a result, the actual amount received will be less than the amount of the death benefit accelerated. An administrative fee is required at time of election.

3. Source: Medicare.gov

4. Source: LongTermCare.gov

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