10 Often-Underestimated Expenses in Retirement

3. Rising home and auto insurance premiums

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. 

While overall inflation has hovered between 2 and 3 percent in recent years, home insurance rates surged 12.7 percent in 2024 and rose 6 percent in 2025, according to a 2026 LendingTree analysis. And federal data shows motor vehicle insurance premiums rose 2.8 percent in 2025, after rising 11.3 percent in 2024 and 20.3 percent in 2023.

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 whom 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 and getting around

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.

Transportation is Americans’ second-biggest expense, accounting for 17 percent of household spending, according to the Bureau of Labor Statistics’ 2024 Consumer Expenditure Survey (CES), the most recent data available.

6. Utility and energy bills

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.

However, utility bills are increasing around the country. Residential electricity prices rose 27 percent and residential natural gas prices rose 26 percent from 2021 to 2025.

7. Supporting 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 on retirement income

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.

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. The true cost of moving in retirement

One in 7 Americans who moved in 2025 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.”

But relocating isn’t cheap, especially if you hire a professional mover. The cost can range from about $1,000 to $25,000, depending on the distance of the move and the size of the home, according to move.org.

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: phone, internet and subscriptions

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 digital services and subscriptions you rarely use or the ones you forgot about after signing up for a free trial. Americans waste an average of $252 a year on subscriptions they don’t use, according to CNET’s 2026 State of Subscriptions report.

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.