Five Overlooked Factors When Planning for Retirement
Not only can taxes, inflation and health care costs catch you unprepared in retirement, but so can the costs of supporting others and paying for the fun stuff.


Forecasting expenses in the distant future, particularly over the span of several decades, poses a considerable challenge. As we funnel funds into our IRAs or 401(k)s, the prevailing sentiment often leans toward a hopeful outlook, with the belief that steadfast financial contributions will pave the way for a cushy retirement. However, there are certain underestimated variables in the calculation of retirement expenses. Being mindful of these five factors could assist in formulating a more accurate and pragmatic retirement budget.
1. Taxes
In addition to pursuing warmer climates, a significant number of retirees are drawn to specific states due to differences in the treatment of retirement income within those regions. Kiplinger shares a list of the 10 Most Tax-Friendly States for Retirees, and that list includes some more well-known retirement hubs, such as Florida and Alaska, alongside states such as Tennessee, Wyoming and Pennsylvania.
However, the prospect of relocating to another state may lack appeal for many retirees, despite the financial incentives. Whether due to proximity to family members or ingrained connections in social and religious communities, many retirees express a desire to stay put in their current states and homes. If this sentiment resonates with you and you reside in a state that taxes income and Social Security benefits, it may be prudent to increase your monthly contributions and save more.

Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
2. Inflation
When calculating the monthly income needed in retirement, it’s important to consider the impact of inflation. For example, $100 worth of groceries in the year 2001 cost $143.56 in 2021, according to rateinflation.com.
Assuming an annual inflation rate of 3%, an individual who wishes to maintain their current lifestyle at $5,000 per month in 2023 should budget for about $11,783 in 2052.
3. Health care and long-term care
Fidelity suggests that an average retired couple age 65 in 2023 would need about $315,000 to cover health care costs during retirement.
Although it may be unpleasant to think about, there is also the possibility that you or your partner may need to live in a long-term care facility. According to a study by Genworth, a private room in a nursing home costs $315 per day, or $9,584 per month, in 2023.
4. Supporting others
As advancements in science and medicine persistently extend the average lifespan, an increasing number of adults find themselves navigating the challenges of the "sandwich generation." This term encompasses individuals who, amid the evolving landscape of longevity, are tending to the needs of elderly parents while also providing support for their adult children.
According to Pew Research Center, more than half of Americans in their 40s are in a sandwich situation, while 36% of those in their 50s, 27% of those in their 30s, 6% of those under 30 and 7% of those 60 and older are in this situation.
5. The fun stuff
Concluding our exploration of retirement expenses is perhaps the most captivating category often overlooked in budgeting — new (and cherished) hobbies! In retirement, the inclination to explore pursuits previously deferred or embrace entirely novel hobbies often takes center stage.
Travel, too, can incur significant costs, especially when relocating, which may require more frequent trips to connect with friends and family. Budgeting for extracurricular activities and travel will allow you to fully take advantage of the resource that was scarce during your working years — time.
For a detailed retirement planning worksheet, you can check out Equi’s free downloadable worksheet here.
Related Content
- Want to Get Rich and Stay Rich? Avoid 10 Investing Mistakes
- Nervously Nearing Retirement? Four Do’s, Four Don’ts and One Never
- To Create a Happy Retirement, Start With the Three Ps
- Five Common Retirement Mistakes and How to Avoid Them
- Three Key Elements of a Solid Retirement Plan
Profit and prosper with the best of Kiplinger's advice on investing, taxes, retirement, personal finance and much more. Delivered daily. Enter your email in the box and click Sign Me Up.

Tory Reiss is a three-time founder of venture capital-backed financial technology startups. He’s currently the CEO of Equi, the elite destination for alternative investments. It is equal parts hedge fund and technology platform, with exclusive access to a variety of uncorrelated alternative investments.
-
You Don't Have to Be Wealthy to Need a Wealth Manager
Navigating complex financial decisions is hard on your own, no matter how much money you have. A wealth manager can provide comprehensive financial planning, investment management, risk management and more.
-
Despite Tariffs, These Investment Experts Are Bullish on European Equities
European equities were one of the better-performing investments during the first half of 2025. They could be a good long-term prospect for U.S. investors needing to diversify, according to these investment managers.
-
How Do You Know You Are Ready for a Gray Divorce? 15 Yes-or-No Questions
As people 50 and older get more gray divorces, many splits are initiated by women who want a new path. Answer these 15 questions to see if you might need to think about how you should move forward.
-
'Buy Now, Pay Later' for Everyday Spending? This Financial Pro Thinks It's Risky
'Buy Now, Pay Later' apps can get you out of a jam when you need money quickly. But using them regularly for small purchases could create problems.
-
Five Things to Consider Before Rolling Your 401(k) into a Roth IRA
Converting at least some of an old 401(k) to a Roth IRA can offer long-term tax benefits and retirement flexibility, especially if you anticipate being in a higher tax bracket later or wish to leave a tax-free legacy.
-
From Dream Apartment to Nightmare: When Your Landlord Evicts You Through No Fault of Your Own
This is what I suggested a tenant do to get out of her lease after her landlord's inexperience and lack of action made her rental situation unsafe. It's a legal situation called 'constructive eviction.'
-
Six Steps to Being Empowered and On Track: An Expert Financial Guide for Women
While most female investors feel on track with their financial goals and empowered by managing their investments, many regret not starting sooner. Here's how you can get started and take control of your financial future.
-
Selling Your Business? This Powerful Insurance Option Unlocks Multigenerational Wealth
Private placement life insurance (PPLI) offers almost unbelievable investment flexibility, estate planning and tax advantages. And it's completely legit.