iStock / iStock.com
Commitment to our readers
The GOBankingRates editorial team is committed to providing you with unbiased reviews and information. We use data-driven methods to evaluate financial products and services – our reviews and ratings are not influenced by advertisers. You can read more about our editorial guidelines and our review methodology for products and services.
20 years
Helping you become richer
trusted by
millions of readers
Just as they dream of home ownership, quality education, good healthcare, and no debt, Americans long for a stress-free retirement. And let’s be real: it means having money.
Yet even wealthy retirees may face tough financial times, especially if they have recently retired and are not fully educated about the expenses that will inevitably arise (or continue) in their later working years.
According to retirement planning experts, here’s what wealthy retirees spend the most on during the first year — and how to get ahead of these costs.
exposed health care costs
Healthcare bills come to all of us, even those on Medicare, and they can derail you in retirement, no matter how wealthy you are.
“Recent research shows that 76% of Americans don’t know or underestimate the cost of health care in retirement and yet many Medicare beneficiaries overlook benefits that can help offset those expenses,” said Whitney Stiddom, vice president of Consumer Empowerment. eHealth. “With health insurance premiums and out-of-pocket medical expenses rising, many Americans are surprised to find that they already have benefits that act like built-in ‘payments’ — they just aren’t using them.”
Get ahead of these costs by being proactive about your health and taking full advantage of the available benefits you may not know about.
“The value of things like no-cost preventive screenings, dental or vision benefits through Medicare Advantage or quarterly over-the-counter allowances can add up to hundreds of dollars each year,” Stiddom said.
home maintenance or relocation
Even after paying off the mortgage, housing expenses remain. And if you are planning to relocate, there is every possibility of financial crisis to be prepared for.
“You typically still have property taxes, insurance and maintenance to maintain during retirement,” said board member and shareholder Daniel Gleich. Madison Trust Company. “Many retirees also consider moving early in retirement, which can lead to additional costs such as moving expenses, closing costs and more.”
To get ahead of these expenses, consider a Self-Directed IRA, a retirement account that allows you to invest in alternative assets like real estate or private debt.
“These alternative assets can potentially generate consistent cash flow that can help cover costs and living expenses during retirement,” Gleich said. “Proactively planning for first-year expenses and taking advantage of tools like self-directed IRAs to enhance income strategies can potentially help retirees better position to maintain financial security throughout retirement.”
Travel and ‘Bucket List’ Expenses
Wealthy retirees may have big and exciting plans to start their retirement. Maybe it’s a “bucket list” adventure or a big home renovation they didn’t have the time or money to do when they were younger. Jeff Judge, Certified Financial Planner (CFP), Accredited Estate Planner (AEP), Chartered Financial Consultant (CFC), Chartered Life Underwriter (CLU), Managing Partner and CFP Practitioner Chesapeake Financial Planner It was recommended that retirees set solid boundaries around these to enjoy them without incurring debt.
“The best way to save without feeling like you’re cutting down on fun is to put simple guardrails around travel and home projects so they don’t become the new normal and keep a clear line between essential spending and discretionary spending so you have flexibility when life or the market changes,” Judge said.