While many people spend decades planning for their retirement, money expert Suze Orman cautioned about three costs that often catch retirees by surprise.
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In a recent article, Orman discussed a new study from the Center for Retirement Research at Boston College that highlighted the unexpected expenses retirees experience and whether they are prepared to handle them. Here are the three surprising retirement costs retirees may want to prepare for and the best way to plan for them.
Rainy Day Expenses
The first category of unexpected retirement costs is rainy day expenses. These are defined by the study as car and home maintenance as well as durable spending. As noted by Orman, these unexpected expenses can average around $2,400 per year.
There are several ways to help prepare for these costs, which can add up quickly. One way, which is recommended by many money experts, is to build an emergency fund. According to the Consumer Financial Protection Bureau, an emergency fund is an essential way to protect yourself in case the unexpected happens.
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Healthcare
Another unplanned cost that can arise during retirement is healthcare. As explained by Orman, Medicare does not cover all healthcare costs for retirees, and out-of-pocket expenses may average $2,000 per year. Healthcare costs are not limited to medical bills; they may also include dental bills, out-of-pocket prescription drugs, nursing home costs and more, according to the study on retirement.
The Boston College research found that 58% of retirees surveyed had an unexpected healthcare expense. The report suggested utilizing a health savings account to help manage these costs.
Family Assistance
According to the retirement study, around 29% of retired households experienced an unexpected expense related to family. Orman noted that these costs may average $1,700 per year.
To help absorb these shocks, Orman recommended retirees have at least eight months’ worth of living expenses saved. Retirees can also work with a financial professional to help plan for costs related to family crises, including aging parents, divorce or loss of a spouse, per CCR Wealth Management.
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This article originally appeared on GOBankingRates.com: Suze Orman: 3 Surprising Retirement Costs To Prepare For
