6 Unexpected Retirement Costs You Need to Plan For

(This article previously appeared on GoBankingRates.com.)

Because retirement planning isn’t a straightforward, uniform process, you have to learn how to look for hidden costs. If you want to get your retirement savings on track, make sure you’re not overlooking one of these six retirement expenses:

“Some people do a really good job putting money away in their long-term savings such as retirement, but neglect to put money into their short-term savings,” said Steve Repak, a Certified Financial Planner and author of the 6-Week Money Challenge: For Your Personal Finances.

When an emergency fund isn’t set in place, it can be necessary to tap retirement funds if the refrigerator goes bust or you face an unplanned medical emergency.

But taking funds from a 401(k) or Individual Retirement Account doesn’t just deplete retirement savings, it also comes with an additional cost. You “most likely will incur taxes and penalties on the withdrawal, which could make that emergency much more expensive,” said Repak.

There’s a reason financial planners recommend investors shift to more stable securities as they approach retirement. “If the majority of your portfolio is exposed to riskier investments and you’re planning to retire in a couple of years or less, a turbulent market like the one we saw in 2008-2009 could force you to work longer or take substantially less” in annual income, said Carlos Dias Jr., founder and managing partner of Excel Tax & Wealth Group in Lake Mary, Fla.

“Many people think that Medicare will cover all their medical expenses in retirement and are surprised, even shocked, with how much they still have to pay out of pocket.,” said Lynn Ballou, a Certified Financial Planner and managing partner at Ballou Plum Wealth Advisors in Lafayette, Ca.

The average 65-year-old retired couple can expect to pay between $265,000 and $395,000 in health care costs over the course of their retirement. You calculate your own estimate using AARP’s calculator.

“As the baby boomers retire and stretch Medicare to a possible breaking point, it is unwise to assume that these costs will go down in the future,” said Ballou. “Many planners are telling their clients to be prepared to pay fully for their medical insurance, co-pay, and uncovered expenses, and be pleasantly surprised if they don’t need every penny for just that reason.”

“Long-term care health care expenses — like home health, assisted living care or a nursing home — can decimate retirement savings in a matter of a few years,” said Dias.

The average cost of basic nursing home services runs about $7,000 per month today, he noted. For just one person, that adds up to $84,000 per year or about $1 million over just 12 years, without accounting for an inevitable rise in costs.

Homes and cars always need to be maintained, even when the costs don’t fit within your fixed budget.

“Even a complete home remodel or fix-up before you retire does not eliminate the need for ongoing maintenance and repair,” said Ballou. “Think realistically about the typical costs of taking care of your home during your retirement years and set up a way to handle those costs. Assume that these costs never end, and have a plan in place.”

To cut costs, many retirees “skinny down to one car,” said Ballou, but automobiles still need to be maintained and eventually replaced. So, “build a car loan as a monthly expense into your retirement budget,” she suggested. “If you have sufficient savings to be able to pay all cash, that’s fine. But if not, saving incrementally is a great approach to help protect your retirement plan.”

“Investors need to be well aware what their investments are really costing them,” said Adam Vega, a Certified Financial Planner and wealth manager at United Capital in Boca Raton, Fla. “Every percentage point that is paid in expenses is a percentage point that is taken from an investment’s return.”

When inflation and various fees are factored in, an investment account could need to generate a return of 6 percent or more, Vega pointed out. “Investors should ask their agents and advisers to itemize all the expenses they are paying — not only what is being paid to their adviser, but all of the expenses.”

You can use the DRAFT app to do this yourself. Then, Vega added, make sure those expenses are factored into your retirement plan projections and goals.