15 Signs You're Underestimating Your Retirement Expenses

It's natural to look forward to retirement, and you may be doing your part to set money aside for it. But if these signs apply to you, there's a chance you'll end up falling short if you don't change your approach.

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Social Security might pay you a fairly generous benefit. But it's unlikely to cover all of your living costs during retirement. If you think it will, you may not understand what bills you're in for.

Many people wind up entering retirement with a paid-off home. But that's not guaranteed to happen. If you refinanced recently, you may still have several years left on your mortgage once retirement starts, leaving you with monthly payments to manage.

ALSO READ: 3 Reasons Not to Refinance Your Mortgage Right Now

Property taxes have a tendency to rise over time. Your annual bill may end up being a lot higher during retirement than it is today.

As your home ages, you may find yourself filing more claims against your homeowners insurance policy. That could, in turn, cause your premium costs to rise during retirement.

ALSO READ: Homeowners Insurance Went Up? Here Are 4 Reasons Why

As homes age, maintenance and repair cost can climb. If you're not accounting for that, you're risking a scenario where you're short on money to cover your senior living costs. Furthermore, you might struggle to do your own maintenance as you age, so you'll need to account for the cost of outsourcing some of that work.

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Once you stop working, you may not have an obligatory daily commute. But that doesn't mean you'll spend so much less on transportation. You may not fill up your car as often, but you'll still need to cover auto insurance, maintenance, and car payments, if you don't end up owning a vehicle outright.

The more time you spend at home, the higher your heat, electric, and water bills are apt to be. Once you stop working, the number of hours you spend in the house could increase, which could result in a more expensive utility tab.

ALSO READ: Why Americans Need to Brace for Higher Utility Costs

Your kids might be grown and out of the house once you enter retirement -- but that doesn't mean they won't come around asking for financial help. And once grandkids come into the mix, you may be in a position where you're being asked to help cover the cost of activities and camp. That could eat into your retirement budget in a meaningful way.

Filling up the hours you'd normally spend working isn't as easy as you might think it is. You might assume you can stay occupied with no-cost activities, but in time, you may need to branch out -- especially if you're not particularly outdoorsy or live someplace where the weather is cold for a good chunk of the year.

Many people choose to adopt a pet once they retire and their schedules open up. But the cost of feeding and caring for an animal can be substantial, so it's one you'll really need to make sure you can swing.

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Taxes can be a huge expense for seniors, and to be clear, being retired doesn't get you out of paying them. Not only are traditional IRA and 401(k) plan withdrawals subject to taxes, but depending on your financial situation, you may be on the hook for taxes on some of your Social Security benefits. It's a good idea to consult an accountant and know what taxes you're in for.

There are a host of discounts available to seniors, such as lower-cost transportation or early bird specials at restaurants. But those discounts may not be as generous as you'd assume. That could throw a wrench into your plans and calculations.

The cost of Medicare premiums tends to rise year over year. And if you're a higher earner, you'll have a surcharge tacked onto the program's standard Part B premium. That could result in higher healthcare costs over time.

In addition to rising Medicare premiums, you'll also have to grapple with the fact that original Medicare does not cover a number of common services like dental cleaning and eye exams. Those are out-of-pocket costs you may need to absorb. That said, you may be able to mitigate those costs by choosing Medicare Advantage over original Medicare.

ALSO READ: Enrolling in Medicare Advantage for the First Time? 3 Things You Need to Know

Inflation makes the cost of living rise over time. You might think you have a clear picture of what your senior living expenses will look like. But inflation could drive those costs higher if it heats up during your retirement.

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Many seniors end up falling short financially in retirement due to underestimating the costs involved. Rather than fall into that trap, keep these points in mind as you map out a retirement budget. Also, do your best to sock away as much money as possible in your IRA or 401(k) so you have more financial flexibility once your career comes to an end.

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