Retirement Retirement Planning

The 10 Retirement Costs Most People Never See Coming (And How to Prepare for Them)

Certain health care and home costs tend to be left out of retirement budgets.

By Josh Koebert , Edited by Laura Hohenstein

Updated May 28, 2026

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Even if you've spent your working life contributing to a 401(k), making safe investments, and carefully nurturing an emergency fund to ensure you are on track for retirement, certain expenses shock even the most well-prepared. Many new retirees are surprised by health care costs, unexpected taxes on retirement income, and how quickly they can spend on leisurely activities day-to-day with newfound free time.

Here are 10 tricky retirement expenses that can elude even the most careful planners, and what you can do to prepare for them.

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Health care expenses

Even with Medicare, out-of-pocket health care expenses can add up quickly. Fidelity's annual Retiree Health Care Cost Estimate predicts that a 65-year-old retiring today will pay an average of $172,500 in health care and medical expenses throughout retirement.

While medically necessary services at providers that take Medicare are covered, retirees may still be on the hook for premiums, certain medications, dental and vision care, and more.

Contributing to an emergency fund or a health savings account (HSA) can help with surprise costs, and it's often worth it, physically and financially, to invest in exercise and other healthy routines before retirement, too.

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Long-term care

Long-term care, which could include hiring someone to help in the home or a stay at a nursing home or other assisted living facility, is generally not covered by Medicare, and costs can stack up to six figures and beyond each year.

Unfortunately, it's a reality many nearing retirement don't consider, but discussing options with family, like long-term care insurance or putting aside an emergency fund, can help avoid future issues.

Hobbies and recreation

Retirement means finally having time to relax and indulge in hobbies and recreational activities, which can include travel, dining out, and other expenses that add up quickly if you're not careful.

While the fun stuff often gets left out of retirement budgets, it's critical to determine how much can be devoted to things like vacation each year, and even on a fixed income, this will likely vary year to year.

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Home maintenance and repair

If you plan to stay in a home you own after retirement, keep in mind that basic home expenses won't stop after the mortgage is paid off. They may even increase. Standard advice for homeowners is to devote 1% to 4% of your home's value to repairs and maintenance each year.

As you age in your home, you may also need to pay for certain upgrades like grab bars or nonslip mats. Careful retirement planning includes considering all the bills involved in maintaining your home, from insurance to surprise repairs.

Taxes on retirement accounts

Though retirees can expect to pay much less in income taxes, a portion of Social Security payments are often still taxed, and other forms of retirement income may be taxed as well.

It's also important to consider how much your state taxes retirement income. Some states, like Florida, offer tax advantages like no state income, estate, or inheritance taxes.

There are strategies that can help reduce your tax burden in retirement, like diversifying retirement savings or relocating to a more tax-friendly state/area.

Spiking insurance rates

If you plan to hang onto your home and car, you will need to keep insurance for both and deal with any hikes in rates as well. Homeowners insurance rates in particular are expected to increase in 2026 and 2027, and those who own homes in areas prone to natural disasters may have trouble maintaining coverage.

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Transportation

Those who commute to work can look forward to saving money and time in retirement, but if you are keeping your car, insurance, gas, and maintenance all still need to be accounted for.

There are ways to save, like couples downsizing to one car, or if you live in an area where it's possible, taking advantage of senior discounts on public transportation.

Supporting adult children/grandchildren

These days, more parents are living with their adult children as they approach retirement age. About 18% of young adults aged 25 to 34 live with parents, according to recent data analyzed by Pew Research Center, and more people under one roof often means more money spent on food, electricity, and other essentials.

First-time grandparents also tend to splurge when a new baby enters the picture. Experts recommend being mindful of gifting and covering bills, and being generous with time instead of money when possible.

Moving expenses

Many retirees end up relocating for one reason or another — be it tax benefits, to be closer to family, or to downsize into more affordable and/or age-friendly housing. In fact, more than 2 million Americans aged 65 and older relocated in 2025, according to a survey from moving services site Hire A Helper.

Moving expenses can add up quickly, especially if you hire a service or are moving a long distance, but a bit of downsizing so there's less to transport can cut costs significantly.

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Home help

Retirees who choose to stay in their homes may find that they need to hire outside help for certain tasks.

Even those in great health may need to outsource some standard household maintenance tasks, like mowing the lawn or cleaning the gutters. It's worth it to consider these services when creating a home maintenance budget.

Bottom line

The key to a stress-free retirement really comes down to careful planning, and that includes budgeting for new, changing, or surprise expenses. A general rule of thumb for working adults is to keep an emergency fund with three to six months of expenses, but retirees, who don't have that next paycheck to rely on, may want to keep more in something easy to access, like a high-yield savings account.

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