Retirement Expenses That Can Rise Sharply After 75

As people move through retirement, their spending patterns often shift. Housing costs may fall if you choose to downsize, and travel spending can also ease with age.

At the same time, healthcare expenses usually climb as retirees get older, and some may also need assistance at home or eventual long-term care. Those rising costs deserve a place in any retirement plan.

How spending changes with age

RBC Wealth Management found that a healthy couple ages 65 to 74 spends about $13,000 a year on healthcare. That amount rises to $23,000 between ages 75 and 84, and to $40,000 after age 85.

Other categories may also decline later in life. Travel, hobbies, cars and dining can become less expensive after 75, depending on your lifestyle. Many people spend more in those areas during their 60s and early 70s, but those purchases may happen less often as retirement goes on.

The point is not to alarm retirees, but to make sure healthcare is built into the budget rather than assuming every expense will trend downward.

Expenses many retirees overlook

Healthcare includes a wide range of costs, and Medicare does not pay for everything. Retirees can still face higher premiums, deductibles, coinsurance, prescriptions and other out-of-pocket bills. Medicare also generally does not cover routine dental, vision or hearing care, except in certain health-related situations.

Long-term care is another major gap. Someone in their 60s may not be thinking about it yet, but it can become necessary in their 80s or 90s. Because it can be costly, it is wiser to prepare in advance than to face it unexpectedly later in retirement.

Planning without going too far

Preparing for higher healthcare costs does not have to feel overwhelming. Setting aside money specifically for medical spending can make retirement budgeting easier, since you can estimate monthly costs instead of guessing. Some people also choose long-term care insurance.

Reviewing your future budget can also point to changes you can make now to create more flexibility. Moving to a smaller home, for example, can reduce mortgage payments. Even without a mortgage, homeowners still have to cover property taxes, insurance and maintenance, which can keep rising over time.

It is often easier to picture retirement travel than medical bills, but for many people, healthcare and other less appealing age-related costs become more important after 75. You cannot predict every expense, but careful planning can give you a stronger financial cushion.