![]() Whether you need a policy or not, you should, at a minimum, understand what it covers and what your options are-also familiarizing yourself with out-of-pocket costs (if you aren’t covered) to incorporate these into your retirement plan. You should also familiarize yourself with long-term care. Under Medicare Part A and Medicare Part B-known as “Original Medicare”-the government pays providers directly for services received and almost all doctors and hospitals in the United States accept this. Medicare consists of four parts, with each one covering specific services. Doing so can potentially save hundreds of dollars a year. Soon-to-be retirees should have a broad understanding of what Medicare covers (and doesn’t cover) before retiring. These numbers represent a 2.61% increase for retiree households, with health insurance premiums comprising the bulk of this cost regardless of age. ![]() Healthcare-which includes health insurance, medical services, supplies, and drugs-ranks third on the “biggest expenses” list for retiree households, who spend an average of $7,030 annually ($586 monthly) as compared with $5,452 for the average U.S. Alternatively, ride-hailing services such as Uber or Lyft can help you save compared to traditional car ownership, especially if you don’t have daily car needs. Shopping around for auto insurance each year is one of the best ways to save money: especially if owning just one car between you and your partner is an unrealistic option. When you consider that almost 80% of seniors over age 65 live in car-dependent suburban and rural communities (according to the advocacy organization Transportation for America), these conversations become even more imperative. These numbers represent a 6.93% increase from the previous year for retiree households.Įngaging in a meaningful discussion about transportation expenses is critical as you prepare for retirement-especially for those set to live on a fixed income. household with respect to transportation costs. The average retiree household spends $7,160 annually ($597 monthly) as compared with $10,961 ($913) for the average U.S. This category includes vehicles, gas, insurance, maintenance and repairs, car rental, leases, payments, and public transportation. While commuting expenses will undoubtedly shrink when you retire, not all transportation costs will follow suit. Alternatively, you can look into downsizing your home to completely sidestep any mortgage debt or move to a state (or country) with a lower cost of living. Generally speaking, paying off your mortgage and building equity before fully retiring is not only a good first step but one of the smartest things you can do to keep your living expenses in check after you stop working-giving you more breathing room with respect to other costs. As if that isn’t concerning enough, many American Financing survey respondents believe they may never pay off their mortgage! In contrast, 34% of those aged 65-79 (and 3% of those aged 80+) had mortgages in 1990: so it’s obvious that Americans today have less aversion to debt than they did just a few decades ago. Even more worrisome is that the Center for Retirement Research at Boston College estimates over 1 in 4 people age 80+ are still paying off a mortgage. More specifically, the average retiree household pays an average of $18,872 per year ($1,573 per month) on housing costs: representing over 36% of their annual expenditures.Ī recent Lending Tree report claims more than 10 million people ages 65 and older still carry a mortgage. Housing expenses-which include mortgage, rent, property tax, insurance, maintenance and repair costs-increased by almost 4% or $722 a year. Retiree households saw increases across all major categories, with housing expenses representing the largest increase (dollar-wise), followed by transportation and food expenditures.Ĭheck out this list of the largest expenses the average household encounters during retirement, along with a few tips on how to minimize the same. This increase-to nobody’s surprise-was fueled by inflation, which was 4.7% in 2021 (per the BLS). By comparison, average spending across all U.S. The most recent Bureau of Labor Statistics (BLS) data claims retiree households (led by someone age 65 or older) boosted their average annual spending to $52,141 in 2021: representing a 4.5% increase from just a year ago.
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