When retirement begins, the budget often looks manageable. The mortgage may be gone, income is predictable and big splurges are behind you. Then a few years pass, costs creep up in unexpected places and the plan that once felt solid starts to feel tighter than anticipated.
Retirement and financial experts explained the expenses retirees most often underestimate, even in 2026, and what you can do about it.
For people who work a traditional career, healthcare is often one of the most underestimated categories because costs rise unevenly over time. Many retirees fail to adequately plan for it, according to James Hargrave, CFP and founder at Pillar Financial Planning. Medicare lowers expenses initially, but premiums, prescriptions, IRMAA (income-related monthly adjustment amount) surcharges and out-of-pocket costs increase later.
“Clients are often shocked to learn that a 65-year-old couple retiring today may need over $172,000 to cover lifetime medical expenses, not including long-term care,” added Josh Katz, CPA and founder at Universal Tax Professionals.
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In the healthcare vein, long-term care costs can be a financially destabilizing surprise. Medicare doesn’t cover custodial care, and even part-time in-home help can run thousands per month.
Jehan Crump Gibson, a trusts and estate litigation attorney and co-founder and managing partner at Great Lakes Legal Group, pointed out that people plan for retirement “but not for aging.” She added that there’s an assumption of “independence lasting longer than it often does.” Some retirees may even expect family members to fill care gaps without accounting for the financial strain, and then find themselves in a financial pinch when it’s time for care.
Owning a home outright in retirement doesn’t always equal low housing costs, either. Property taxes, insurance and regular maintenance remain ongoing costs. Katz also pointed out that any modifications needed to be made for accessibility can be steep.
Gibson added that health and housing costs can actually “compound each other because a health issue often triggers housing changes and caregiving needs simultaneously.”
Retirees may have budgeted for their auto and home insurance premiums as a flat line item when they are actually rising faster than other bills. In fact, Katz said, these premiums are “increasing at double the rate of general inflation.”
