People approaching retirement like to think they'll spend less when they hang up their hat, but the reality might be a lot different than that, at least according to researchers at Bernstein Global Wealth Management.
Daniel B. Eagan says the idea that you'll spend less in retirement might be the biggest misconception there is.
"It's hardly ever true, though retirees truly believe it, " he told Business Insider. "R etirees end up spending even more until they're really old and then they're home-bound."
Take a look at what's driving their costs up:
The rising costs of healthcare: Medical costs have cast a long shadow over retirement, according to a spring report from Fidelity Investments, and it's only going to get worse. "A 65-year-old couple retiring this year without any employer-based health coverage would need an estimated $240,000 to cover medical costs through retirement," wrote Lee Adler. That's not even accounting for complications like Alzheimer's. Currently, Americans spend $2.8 trillion on health care each year.
Supporting millennial kids: Whether it's helping with student loan debt or putting the downpayment for their child's first home, more retirees are financing relatives' lives in some way. According to the National Association of Realtors' "Profile of Home Buyers and Sellers," 26 percent of first-time homebuyers received cash for a downpayment from a relative or friend. Others went so far as to take on their child's entire mortgage.
Funding a grandchild's education: Grandparent spending skyrocketed between 1999 and 2009, according to Met Life, and it's a trend that will likely continue. In 2009, grandparents said they spent $2.43 billion on primary and secondary school tuition and supplies, three times more than they did a decade prior.
Taking vacation: Unless they're seasoned travelers, we doubt most retirees will try to cut corners when they're planning some overdue beach time. Yet these expenses can quickly add up, especially when consumers don't pay attention. As we've reported before, all-inclusive cruises are riddled with fees, from cocktails to off-shore excursions, and let's be honest: traveling abroad hasn't gotten much cheaper. International fares can easily edge into the thousands.
Filling idle time: "Believing it'll cost less not to commute to work, that you won't be eating out as much, and will stay home and garden is just wrong," said Eagan, the wealth researcher. "These are smaller things compared to the larger items, like travel and healthcare. You'll also have more time on your hands that you'll want to fill with pleasure." And that pleasure will cost you to the tune of $57 a month, according to MainStreet.DON'T MISS: 13 health gimmicks you can stop wasting your money on >
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