5 Overlooked Costs That Could Eat Up Your Retirement Savings

Over the past few decades, as pension plans have largely vanished and costs of living have soared, retirement has become financially challenging for many Americans. The crisis is so bad that even millionaires worry they won’t have enough to retire.

How much you’ll need to comfortably retire depends on where you live, what sort of lifestyle you maintain and other factors that are best sussed out with a financial advisor. One thing you can count on, just as you can in working life, is unexpected costs.

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GOBankingRates spoke with financial experts to learn about five overlooked costs in retirement that could eat up your savings .

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Healthcare Expenses That Medicare Doesn’t Cover

Though Medicare will cover many of your medical expenses once you enroll at 65 or older, it won’t cover all of them. Costs associated with healthcare can drain you in retirement if you are not financially prepared.

“On average, individuals 65 and older can expect to spend approximately $14,000 on healthcare expenses annually, not including long-term care costs,” said Corie Wagner, senior editor and industry researcher at TheSeniorList . “Though this is a daunting number, planning ahead for health costs can relieve stress significantly.”

Wagner has found that many people get confused or overwhelmed when choosing Medicare and other insurance coverage, and recommended going directly to Medicare.gov for the most reliable and up-to-date information on coverage options.

“We also recommend meeting with a financial advisor well before retirement to ensure you’re saving enough for your future medical costs,” Wagner said. “With the cost of care at an all-time high, a long-term care (LTC) insurance policy is also essential for many — it can help you pay for assisted living, nursing homes or other care not covered by Medicare.”

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Homeownership

Homeownership may be a grand achievement, but it can also totally devour your savings if you’re not prepared for the related expenses.

“Besides the mortgage payment, owning a home entails property taxes, maintenance and repairs,” said Erika Kullberg, a personal finance expert and founder of Erika.com . “Some of these costs can be reduced by downsizing to a smaller place or moving to an area with lower property taxes.”

Inflation

Kullberg said that many retirees also fail to account for inflation, which can also eat up their nest egg.

“Even small inflation rates of 2% to 3% a year can eat away at purchasing power,” Kullberg said. “Investment portfolios need to be constructed so that they outpace inflation, usually by holding at least a portion of equities.”

The Possibility of Losing Your Spouse

Undoubtedly this is a dark one, but it’s a reality that Devin Carroll, owner and lead advisor of Carroll Advisory Group , sees all too often.

“While the emotional toll is challenging to prepare for, it’s crucial to also plan for the financial impacts,” Carroll said. “Failing to do so can leave retirees vulnerable during an already difficult time. To safeguard their financial future, it’s important for them to understand how losing a spouse can affect various income sources, such as pensions and Social Security benefits.”

Here are a few specific things you always should do, according to Carroll.

• Assess pension plan survivorship options.
• Review Social Security benefits.
• Evaluate expenses and budget.
• Update estate plans.

Fees for Professional Financial Services

In order to ensure a comfortable retirement, it’s important to work with financial advisors. But you’ll have to budget for this professional help.

“Fees can range from 0.5% to 1% of your assets annually,” said Taylor Kovar, CFP, founder and CEO of 11 Financial . “Seek fee-only advisors or manage investments yourself if you have the expertise. Compare fees and services before committing.”

This article originally appeared on GOBankingRates.com : 5 Overlooked Costs That Could Eat Up Your Retirement Savings