Expenses plummet in retirement, and that is a good thing, because many retirees are getting by on half their pre-retirement income. But here is a disturbing fact: experts and retirees themselves readily identity six big expense categories that retirees should have set aside money to cover. But many did not.
And now they regret that big time.
Here are a half dozen big expenses that almost certainly will be part of most retirements.
Taxes. Retirement is not a free pass to stop paying taxes. Thirteen states tax at least some Social Security income: Colorado, Connecticut, Kansas, Minnesota, Missouri, Montana, Nebraska, New Mexico, North Dakota, Rhode Island, Utah, Vermont and West Virginia. Seven states do not tax pensions -- Florida, Nevada, South Dakota, Tennessee, Texas, Washington and Wyoming -- but that means 43 do. The IRS gets into this act, too, where Social Security income may be taxed if all income exceeds a specified base. The IRS also will seek to tax monies withdrawn from a tax advantaged savings plan. Many, many seniors - said multiple advisers - assume they will stop paying taxes when they retire. It just is not so, and budgets have to be constructed with the tax man in mind.
Fun. Multiple experts pointed to this as a huge - and ironic - retirement planning oversight. The irony comes in, because many of us think of retirement as a blur of cruises, golf outings, multi-generational family vacations back to the ancestral stomping grounds in search of roots, and more. Just one problem: seniors probably have the time to travel but the other necessary ingredient is money. Of course, most have not set aside a budget to fund an annual vacation and other fun activities. Said Scott Puritz, managing director at Rebalance IRA: "Once people stop working they have ample free time to enjoy retirement and many people don't realize that they haven't saved enough to live comfortably." What can be more boring than sitting around the TV watching reruns all day and much of the night because there is no cash for better activities? Plan in advance to avoid this tedious outcome.