Hopefully, by the time you enter retirement, you’ve managed to pay off things like your mortgage, your car and any other outstanding debts that may have been trailing you. Often, retirees have less income to spend in their golden years, but that is also matched by the fact that folks over the age of 65 typically having fewer bills to pay.
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As reported by the Consumer Expenditure Surveys via the U.S. Bureau of Labor Statistics, the average retiree in the 65-74 age bracket spends approximately $5,429 per month — that’s approximately $65,149 per year. That $65,149 covers everything from housing costs to dining and recreation to medical costs (which is typically the only elderly spending that increases, with retirees between 65 and 74 spending roughly $8,000 yearly on healthcare).
Overall, costs tend to decrease as retirees age, with those who are 75 or older spending around $4,419 monthly, or $53,028 per year. Even with a slight uptick in medical bills, spending on things like transportation and entertainment continues to decrease as a retiree approaches 80.
However, even with that overall downward trend in spending as retirement goes on, there are a number of bills and expenditures that can drain a retiree’s savings rather quickly. Here are seven such bills that any person over the age of 65 should be prepared for.
Healthcare
Even with the many savings advantages of Medicare, there are a number of costs associated with healthcare that come right out of a retiree’s pocket. From deductibles to premiums, the average retiree will pay about $1,425 per year in out-of-pocket medical costs. Utilizing a supplemental policy with Medicare, and/or utilizing health savings accounts, can help guard against this quick drain on retirement funds.
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Housing Expenses
Even after a mortgage has been paid off, there are still the pricey annual costs of home insurance and property taxes that a retiree must contend with. To offset these costs, consider renting out a room or garage space, or even moving to an apartment and renting or selling your entire home.
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Emergencies
Nothing can derail savings quite like an emergency, as they can occur suddenly and bring with extreme costs. It’s incredibly important to have extra cash set aside specifically for emergencies alone to help protect against the financial damage they can bring.
Debt
A recent Survey of Consumer Finances revealed that debt has quadrupled within the 65-74 age bracket (1992 to 2022) and has increased sevenfold for those 75 and older. This is an exponential increase in debt, which can be devastating to any savings account, retirement or otherwise.
Fee-Driven Credit Cards
Having a major credit card to augment your retirement spending may feel like a comfort, but the high annual fees that come with them might just derail your retirement savings. It may be worth considering a no-fee credit card instead.
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Subscription Fees
In this increasingly digital age, it’s easy to be drawn into new subscriptions for newspapers, magazines, streaming platforms and more. Often, people will sign up for a free trial with the intent to cancel — and then forget. Yet these small subscription fees can snowball very quickly and easily derail a savings account if attention is not being paid. Retirees should perform monthly reviews of their finances to check for such excess charges that can add up.
Overpriced or Outdated Insurance
As a person ages, their insurance needs change as well. A retiree who no longer drives, for instance, should discontinue or adjust their car insurance to reflect that. Similarly, a retiree may move to a smaller home or a better part of town — and can thus change their premiums in accordance with that and save money in the long run.
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This article originally appeared on GOBankingRates.com: How Much the Average Retiree Spends Plus 7 Bills That Drain Retirement Savings
