Higher Medicare and household expenses biggest financial shockers in retirement
Mix of spending changes but total outlays don't go down, retirees say
The two most unexpected and unpleasant financial surprises of retirement are steep Medicare premiums and larger household expenses, according to readers responding to a request for retirement input from The Wall Street Journal.
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With regard to Medicare, several readers said they had not realized how sizable and/or sudden changes in their income, such as taking a buyout, can make them vulnerable to Medicare “surcharges,” which are the larger-than-normal premiums that some individuals pay for Medicare Part B and prescription-drug coverage.
As for household budgets, many readers said that the rule of thumb about expecting to spend about 80% of preretirement income in retirement just doesn’t hold up.
“The reality is that you spend 100% of your preretirement income after you retire,” Steven Fechner, a retired geologist in Reno, Nev., told the Journal. While commuting costs and clothing expenses are lower, he said, the savings in those areas are “eaten up by costs associated with having more time.”
Greater-than-expected spending often involves travel and recreation expenses, medical costs, attending family functions and giving gifts, and vehicle maintenance, the story noted.
Most respondents, however, said their finances and nest eggs are holding up well, especially those who said they paid off debt before retiring.
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