The Five Biggest Stealth Costs in Retirement
The bills they don’t see coming cause retirees the most angst. Here's what to look out for.


Workers heading into retirement and those already there typically prioritize income management, which means covering all the bases financially. After all, retirees usually live on a fixed budget, so counting every expense is essential.
Yet even the best income strategy efforts fail when retirees don’t consider stealth, or hidden expenses, including unexpected bills and costs.
Unexpected bills can be a major source of stress for retirees, as demonstrated by a recent study conducted by TheSeniorList.com. Roughly 43% of those surveyed reported being more financially stressed during retirement than before, with unexpected bills contributing significantly.

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Retirees who have saved enough for what could be 30 years of a post-work life may be well-prepared for unexpected costs. But many retirees haven't saved enough, with the magic number to retire comfortably sitting at $1.26 million or higher, according to recent studies.
“Retirees and pre-retirees are increasingly more aware of the need to prepare for unexpected financial events, yet the amount they can afford to save for these events has decreased,” said Ruth Schau, director of retirement at Novant Health. “Too many people still hope for the best instead of realistically planning for life and unexpected events.”
The high inflationary environment is taking a toll at the moment. Savings and investments are not keeping up with the pricing pressure, according to a majority of pre-retirees and retirees surveyed by the Society of Actuaries (SOA) Research Institute in its Retirement Risk Survey.
The report showed that 20% of retirees and 35% of pre-retirees have experienced an unexpected financial shock resulting in a loss of more than 25% of assets, Schau noted.
Here's a look at the biggest stealth costs in retirement.
1. Health care costs
Although retirees expect health care bills to be a reality, the rising cost of good health care often surprises them, noted Jeffrey Stouffer, a certified financial planner and Finance and Investing Expert on JustAnswer.
“The sudden and acute medical issues are hard to prepare for, and the chronic ones may last longer than planned," Stouffer said. "This depletion may force other changes to be made hastily.”
Without insurance and depending on the severity, unexpected medical costs can be anywhere from $20,000 for a two-night stay in a hospital to upwards of $100,000 or more for longer stays and critical conditions, Stouffer noted.
If a stealth event is insurable, such as a medical event, then paying the premium plus any supplemental coverage will go a long way toward covering the expense, Stouffer said. If the event is liability-related, such as someone slipping on the ice on your property, home insurance coverage should be in place to cover the potential risk, he added.
2. Taxes
Conventional wisdom among retirees is that taxes generally, with some exceptions, go away in retirement. Usually, they don’t disappear, experts say.
“That’s especially the case with how different income sources are taxed,” said Nick Bour, founder and CEO of Inspire Wealth, an investment advisory firm in Brighton, Michigan. “The majority of consumers who were W-2 earners during their careers are only accustomed to income being taxed one way, and that completely changes in retirement.”
Potential taxes will vary considerably from person to person depending on their income, where the income comes from, and how it is taxed.
“Proper planning, positioning of assets, and preparation could potentially save thousands to hundreds of thousands of dollars over a 20-plus year period in retirement,” Bour noted. “I’ve seen a wide range of costs of $50,000 to $1,000,000 just in taxes during retirement.”
3. Emergencies
An unexpected financial emergency can spring up at any time, which is why it pays to be prepared. If not, you might be on the hook for family medical expenses, car repairs, home repairs, broken appliances, pet medical expenses, you name it.
“That’s why retirees need to have a separate amount of saved money within their savings account to help protect the income they’ll live on during retirement,” said Hope Albu, senior financial planner at UMB Bank.
“Unexpected costs can come up and reduce your monthly income, and you won’t be able to make that money back on a fixed income unless you go back to work,” she said.
4. Family crises
A retiree’s family support bills can soar in specific situations, and if the cost wasn't budgeted for, it becomes a considerable stealth expense.
“It can cost up to $20,000 per year to help adult children through crises and up to $50,000 per year in college tuition for grandchildren,” said Trey Holmes, a financial advisor at NEXT Financial Group in San Angelo, Texas.
Holmes also cites major unexpected events, like the death of a spouse. “Here, the average funeral cost is $12,000, and you’ll also have legal fees to help settle the estate. Those can range anywhere from $5,000 to $10,000 or more."
5. Inflation-related costs
This stealth cost covers a ton of ground, but retirees routinely cite inflation as one of the most surprising ongoing costs in retirement.
“Many retirees don't anticipate how inflation decreases their spending power,” Holmes said. “For example, $50,000 a year today in savings will need to be $90,000 in 20 years.”
According to the SeniorList study, “inflation and cost of living” were the most surprising factors for 28% of retirees, just surpassing the 27% who cited medical and healthcare expenses.
“For those living in older homes or disaster-prone areas, accounting for these costs in retirement planning is crucial,” the study noted. “Grocery and food costs have surprised many older people, as their costs have risen faster than many other goods.”
Three ways to curb stealth costs in retirement
Deploy these action steps to be prepared for unexpected living costs in retirement.
Build an annual ‘stealth’ budget
There’s no easy way to predict or prepare for unexpected expenses. “Moreover, many people mistakenly consider any irregular cost an 'emergency,'" Schau said. “Planning for these unexpected costs is important because they will always arise.”
Whether replacing tires, buying a new washing machine, or refreshing your garden, stealth expenses should be expected. “Rather than treating them as emergencies, it’s wise to budget for them annually,” Schau added.
Pushing back your retirement
Delaying your retirement by even six months, let alone a few years, can yield a much bigger nest egg in the long run.
“During these bonus working years, you’re not only saving more for retirement, since it’s a short-term financial goal, but you’re also not spending your current retirement savings, which are left to accumulate more investment earnings,” Schau said. “After all, the older you are at retirement, the more likely you’ll have greater savings and more money to spend.”
Stash the cash, and the earlier, the better
Putting aside money and letting savings grow over time is the most critical stealth savings step, especially for health care expenses.
“Even with insurance coverage, out-of-pocket costs for co-pays, co-insurance, or uncovered expenses can become substantial,” said Glen Franklin, lead generation strategist at Jackson National Life Distributors in Nashville, Tennessee.
Franklin advises leveraging health savings accounts to save for medical expenses. “If the household has a high-deductible plan available and it’s appropriate to use that type of coverage, they can then use a health savings account to accumulate wealth,” he said. “
HSAs offer retirees a triple tax benefit. “The account is funded with pre-tax money, it grows tax-free, and withdrawals for healthcare expenses are not taxed. That may be the best option, but even regular retirement savings accounts will help,” Franklin added.
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A former Wall Street bond trader, Brian O’Connell is the author of two books: “The 401k Millionaire” and “CNBC’s Creating Wealth.” He's written for national finance publications such as TheStreet.com, CBS News, The Wall Street Journal, U.S. News & World Report, Forbes, Fox News and others. With 20 years of experience covering business news and trends, he believes education is the best gift a financial consumer can receive – and brings that philosophy to his work. Brian is a graduate of the University of Massachusetts, and currently resides in Palmas del Mar, Puerto Rico during the winter, and in Bucks County, Pa., when Mother Nature cooperates.
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