As retirement nears, you’re likely thinking of relaxing and spending time with friends and loved ones. You can finally live life the way you want, without the burdens of a regular 9-to-5 job weighing you down. However, one thing you’ll need to keep in mind is how much you’ll have to shell out for basic living expenses, as well as products and services you use on a daily basis. If you’re not properly prepared, all it takes is one major financial misstep to throw your financial plan off course.
How much money will you need when you call it quits for good? We’ll clue you in. Here’s how much these 10 common items cost in retirement based on the Bureau of Labor Statistics Consumer Expenditure Survey.
Average annual cost: $18,416
One of the biggest costs retirees face is housing. Those age 65 and older spend an average of $59,478 a year in order to maintain a roof over their heads. Expenses for housing include utilities, fuels, and public services (averaging $4,025 a year) and water and other public services (averaging $616 a year). Homeowners who still have a mortgage face the added annual costs of mortgage interest and charges ($2,858) in addition to property taxes ($2,400). Retirees who are renting are responsible for average annual costs of $2,406.
Next: Eating well
Average annual cost: $7,164
Don’t forget to factor in the cost of food during your golden years. Retirees are spending an average of $7,164 a year on food expenses. Roughly $4,249 each year is spent on food prepared at home. The most expensive food-related costs for home-cooked meals are for meats, poultry, fish, and eggs ($957 annually) and fruits and vegetables ($815 annually). When it comes to eating out, retirees spend an average of $2,914 each year on food away from home.
Next: They get around.
Average annual cost: $10,041
Although retirees aren’t traveling back and forth to work, they’re still spending a significant amount of money on transportation (possibly for medical appointments, trips, and visiting family). The average annual cost for transportation for those 65 and older is $10,041. Some of the most expensive costs associated with transportation include gasoline and motor oil (annual average of $1,966), maintenance and repairs (annual average of $990), and vehicle insurance (annual average of $1,543).
Next: Staying healthy
4. Health care
Average annual cost: $5,248
As you get older, it’s not uncommon for health to decline. Consequently, you’ll need to see your doctor more often. The average annual cost for health care for those 65 and older is $5,248. Some of the most expensive costs associated with health care include health insurance (annual average of $3,592), medical services (annual average of $932), and medicine (annual average of $550).
Next: The tax man is coming for you
Average annual cost: $11,970
The tax man cometh even in retirement. This is definitely one expense you’re not going to want to let slip your mind. The IRS certainly won’t let you forget. The average annual tax burden for retirees is $11,970. Some of the most expensive costs associated with taxes include federal income taxes (annual average of $9,505) and state and local income taxes (annual average of $2,341).
Next: Looking good
Average annual cost: $1,627
Fashionistas come in all shapes, sizes, and ages. Just because you’re retired doesn’t mean you want to wear tattered, outdated clothing. If you’re leading a full and active life, you’ll still want to look good. Retirees still spend money (though not a lot) on apparel. According to the survey, those age 65 and older are spending an average of $1,627 each year on clothing. That amount includes an average of $317 a year for footwear.
Next: Taking care of yourself
7. Personal care products and services
Average annual cost: $743
One retirement expense that’s easy to forget about is the cost of personal care products, such as shampoo, deodorant, skin moisturizer, toothpaste, and other self-care products. You might not work in an office anymore, but it’s still important to smell fresh and clean. The average annual cost for personal care products and services for retirees right now is $743.
Next: A night on the town
Average annual cost: $3,182
Now that retirees have more time on their hands, they can spend it going to the theater or engaging in hobbies they didn’t have time for when they were working. The average annual cost for entertainment for retirees is $3,182. Some of the most expensive costs associated with entertainment include audio and visual equipment and services (annual average of $1,155); hobbies, playground equipment, and toys (annual average of $839); and pet care (annual average of $744).
Next: Thinking ahead
9. Life and other personal insurance
Average annual cost: $482
You might not want to think about it, but someday you are going to die. Hopefully, you’ve prepared to leave something behind for your loved ones who are financially dependent on you. It’s also a good idea to have personal insurance in the event you become disabled and need additional funds to help you take care of your medical needs. Retirees are paying an average annual cost of $482 for life and other personal insurance.
Next: Back to school
Average annual cost: $1,272
Some retirees are still interested in expanding their knowledge well after they’ve left the workforce. In 2009, students age 25 and older accounted for 40% of all undergraduate and graduate students. That number is expected to rise to 43% by 2020. Thanks to special senior discounts and the rise of cheaper online options, the average annual education cost for retirees is $1,272.
Follow Sheiresa on Twitter @SheiresaNgo.