10 Sneaky Retirement Expenses You May Not See Coming

Then there are the costs of renovating a home to make it more livable as you age, says Jason Parker, president of Parker Financial in Silverdale, Washington, and author of Sound Retirement Planning: A Retirement Plan Designed to Achieve Clarity, Confidence, and Freedom.

This can mean anything from replacing rugs with carpeting (less trip hazard) to making a bathroom or kitchen wheelchair-accessible, which can cost tens of thousands of dollars, according to home-services marketplace Angi. Get multiple bids and quotes in writing for any work you’re considering, he recommends.

3. Home and car insurance

If you own a home and a car, insuring them is an expense you can’t do without, literally — it’s generally required by either lenders or state law. And costs for both are soaring. Average annual home insurance premiums rose from $1,984 in 2021 to an estimated $2,522 at the end of 2024, and average auto insurance coverage spiked even more sharply, from $1,567 to $2,469 a year on average, according to online insurance marketplace Insurify.

What should you do? Consider working with an insurance broker who represents multiple insurance companies (and receives commissions from them on sales) and can shop for better rates on comparable policies, Parker says. He did this after his car insurance increased by 20 percent in one year and ended up saving thousands. Parker also advises reviewing how much coverage you need, especially in multicar families — some of his savings came from scaling back to collision-only coverage on one older vehicle — and looking into bundling home and car insurance. Many insurers offer discounts if you buy both from them, typically running around 20 percent, according to Bankrate.

4. Travel

Travel costs in retirement will vary not only based on where you go and where you stay but on who you bring along, Ross says: “Do your adult children join you on these trips, and are you paying the way for everyone?”

Typically, you should plan to travel much more in early retirement and much less — if at all — in the later years, Toberman says. Folks who have set aside money for travel throughout their retirement might end up with a small “safety net” of money for medical costs if they have to cut back on trips for health reasons, he adds.

5. Transportation

Driving costs money, from car payments to maintenance to gasoline to insurance, and with the extra time you might be doing more of it — especially if you choose to retire to a remote area, says Ralph Bender, founder and CEO of Enduring Wealth Advisors in Temecula, California.

As you age, you may find yourself increasingly relying on others to help you get from place to place, Bender adds. That might include rides from family and friends, but there likely will be times you’ll need to take an Uber to the doctor’s office or a cab to the store and back.

6. Utilities

Utilities are one of the few expenses that should head south in retirement, Toberman says. With the kids gone, there’s less showering, cooking and devices charging day and night. And many retirees downsize to smaller homes that cost less to heat and cool.

Still, inflation can offset those empty-nest savings — utility companies have been known to raise their rates. The federal Bureau of Labor Statistics reports that the cost of electricity grew by 4.5 percent over the 12 months ending October 2024. (The average bill nationwide that month was $144.84, according to SaveOnEnergy, an online marketplace for electricity plans.) That’s one reason Bender suggests installing solar panels with batteries, which can reduce rising electricity bills.

7. Kids and grandkids

Spending on kids and grandkids can be as simple as a gift card, as lavish as a trip to Disney World or as lofty as a fat contribution to a college savings plan. In almost every case, it’s going to cost more than you think, says Ross.

It can also be unpredictable, Toberman says. New grandparents tend to overspend on their first grandchild, he says, then when the next comes along (and, perhaps, the next and the next), they feel obliged to match that generosity, even if they can no longer afford it.

Toberman's solution? Be particularly mindful of spending on that first grandchild. Jenkins offers another suggestion: “Instead of spending money on grandchildren, spend time with them.”

8. Taxes

Many retirees expect their tax bill to decline, since retirement income is generally lower than work income (and the standard deduction is higher at 65), but it might not go down as much as you think. You still owe federal taxes on money you take out of a traditional IRA or 401(k), on pensions and annuities, and possibly on Social Security benefits, depending on your total income.

Most states also tax at least some forms of retirement income. And rising home values mean ever-higher property taxes, if you still own your house.

But if you can’t avoid taxes, you can strategize to minimize them in retirement. Planning ahead is key. Ross recommends diversifying your retirement savings — for example, splitting them among a traditional IRA, Roth IRA and a brokerage account, all of which are taxed differently when you take money out. “That gives flexibility to respond to the situation each year in the most tax efficient way,” he says.

9. Moving

One in seven Americans who moved in 2024 cited retirement as the reason, according to the most recent National Movers Study from United Van Lines. A lot of older folks move “to stretch dollars,” Parker says, going “from a high-cost to a low-cost area,” relocating isn't cheap, especially if you hire a professional mover. Consider: a full-service local move (under 100 miles) costs $7,600 on average, according to Move.org, and a full-service, long-distance move (over 100 miles) costs $9,140 on average.

Parker cites a couple he works with who had moved from Washington state to Florida, at a sticker-shocking price tag of nearly $50,000. Had he been advising them at the time, he says, he would have suggested they seriously downsize first so they'd have less stuff to transport.

10. Staying connected

Just a phone line, home internet and cable TV can cost a couple $300 per month, a budget bite that can feel bigger on a retirement income, says Marguerita Cheng, CEO of Blue Ocean Global Wealth in Gaithersburg, Maryland.

That doesn’t include all those streaming services you rarely use, or the ones you forgot about after signing up for a free trial. Among the little things that sneak up and suck the life out of your retirement savings while you aren’t looking, subscriptions — digital and otherwise —are the biggest, Cheng says. A July 2024 LendingTree study found that 1 in 4 consumers subscribe to a streaming service they no longer use.

Review your bank and credit card statements to identify subscriptions you can do without. (You can always start them up again when your favorite show returns for a new season.) Also, shop local cell and internet service options to see if a different plan or provider can lower your bills.