Social Security is the foundation of retirement for millions of Americans. According to the Center on Budget and Policy Priorities, around 66 million people — or almost one in every five U.S. citizens — received Social Security payments in February 2023.
However, the government program, which has been in place since the mid-1930s, is in peril. Not only is the Social Security trust fund running out of money — and on schedule to run out in a decade — but there are additional budget-cutting plans on the table.
GOBankingRates recently revealed that a group of Republican lawmakers seeking to reduce federal expenditure is targeting Social Security. Last June, the 176-member House Republican Study Committee (RSC) endorsed a budget strategy that would progressively raise the full retirement age (FRA) for seniors turning 62 in 2033 to 69 years old.
Depending on when you were born, your FRA is either 66 or 67. In the long term, this implies less money in Social Security payouts for seniors.
With the survival of Social Security in doubt, it’s critical that both current and prospective retirees are well-educated on the things that individuals in their senior years spend the most money on. Here are some of the most prevalent costs as researched by financial and retirement specialists.
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Home Maintenance
If you’ve been in your house for more than a few years, you’re definitely due for some upgrades, or at the very least, some home maintenance. This is especially true if you want to stay in your home for an extended period of time (i.e., during retirement or the majority of it).
“The longer you’ve lived in your home, the higher your maintenance costs are likely to be as systems age and require larger repairs or replacement,” Paceline Wealth Management founder Jeremy Bohne said.
“Upgrading roofing, heating, and air conditioning systems incurs significant costs.”
Travel
Many Americans store “bucket lists” and other trip experiences until retirement when they can lay back and relax without ever having to check in with the boss again. However, travel, especially in today’s inflated climate, can be a significant price you should budget.
“People understand that travel is a priority in retirement, but what they don’t often account for is that it isn’t all for vacation,” said Bohne. “For those who are interested and able to do it, visiting adult children and grandchildren can rival the cost of vacation.”
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Healthcare (Even Medicare)
It’s impossible to predict how much you’ll need to set away for healthcare in retirement since it’s so individual; but, it’s sure to be a significant price.
“Healthcare is frequently the wild card in retirement expenses due to the sheer size it can reach, as well as the difficulty in predicting when or how long it may be required,” said Bohne. “It also has a tendency to rise faster than overall inflation, which is also problematic.”
Christian Simmons, a certified personal finance educator and financial columnist for RetireGuide.com, points out that even with Medicare and Medigap, medical bills are a huge drain in retirement.
“A recent Fidelity study even found that the average couple may need more than $300,000 in retirement exclusively for medical expenses,” Simmons added. “Costs are also rising, with the Medicare Part B premium expected to rise in 2024.”
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Property Taxes
If you own a house, you are well aware of the crushing weight of property taxes. These just don’t quit, no matter how long you’ve owned. And they tend to go up over the years as real estate prices spike.
“Property taxes must always be paid, but unlike a mortgage, they can never be paid off permanently,” Bohne said. “Assessed values tend to lag market value, but a run-up in real estate prices means that property taxes will follow on a gradual basis.”
Home Insurance
“One factor that many people may have overlooked is that home insurance is becoming less affordable, or even [less] available in certain parts of the country,” Bohne said.
“Because of climate change, natural disasters such as wildfires and hurricanes are more frequent and severe. The result is that premiums are skyrocketing for at-risk areas — hint: warm places people want to retire — and some carriers are leaving these states altogether.”
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Source: Yahoo Finance
