- Retirement is more complicated than many people realize.
- There are several unexpected expenses people face in retirement that they hadn’t planned on, from surprising healthcare costs to "gray divorce."
- Here are seven surprising expenses people don’t always expect when they retire.
- Visit Business Insider’s homepage for more stories.
The basic formula for retirement is supposed to be relatively simple.
Contribute to your 401(k), save money each month, and once retired, you can rely on your investments, Social Security, and Medicare to cover your needs.
That’s easier said than done.
The reality is that retirement is more complicated. Retirees often face surprising expenses that they didn’t expect — or know they should have considered before retiring.
Running into any of these expenses can end up, at best, putting a dent in your retirement savings, and at worst, derailing your long-term retirement plans.
We asked financial advisors what retirees should know about some of the most common unexpected expenses they see from their clients.
Here are seven surprising expenses people don’t always expect when they retire, according to the experts.
Standard and unexpected healthcare costs
Lynne Sladky/AP Photo
According to estimates done by Fidelity, the average couple who retires at 65 in 2019 will need approximately $285,000, after taxes, to cover healthcare expenses.
Plus, there are overlooked healthcare costs, including vision and dental exams, that many retirees don’t consider.
This is one area where Danielle K. Roberts, cofounder of Boomer Benefits, sees her clients struggle.
"Many fail to plan for unexpected health conditions and often don’t think about the potential that they may not be as healthy down the road as they are today," she told Business Insider.
The cost of Medicare premiums
Susan Walsh/AP Photo
Roberts said she reminds clients that Medicare is not free.
"Because so many of them are unaware that there are both premiums and cost-sharing associated with Medicare, they fail to save enough for it," she said.
Only parts of Medicare are free, and most Medicare recipients pay a monthly premium that can increase for those with high incomes. Prescription drug coverage, known as Medicare Part D, also has a monthly premium depending on which plan you choose.
These costs can add up for people on fixed incomes who aren’t planning on it.
Additional health insurance beyond Medicare
AP Images for National Council on Aging and Sanofi Pasteur
Another unexpected expense? Supplemental insurance.
That’s because Medicare doesn’t cover all of your healthcare needs.
"Since Medicare only covers 80%, many Americans are surprised how much healthcare costs still are when they have to cough up funds to pay for the remaining 20% of costs for their medical care," Roberts said.
For many, the 20% comes in the form of supplemental insurance, often called Medigap plans. These plans help take care of the costs not covered by Medicare, including copays and some additional doctors’ fees.
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