By Steve Dinnen
A recent issue of Kiplinger warns about the hidden costs of retirement, and rightfully so: A lot of expenses can chip away at our financial security as we try to live out those golden years.
Health care expenses top the list, though I’m not certain I totally agree with Kiplinger (which is usually a great source of advice). Don’t most of us have Medicare or private insurance to shoulder those expenses? You could run into trouble if you have a stroke, for instance, and are incapacitated to the point where you need assisted living. That’s expensive, and Medicare doesn’t cover room and board associated with assisted living. Long-term care insurance would be an option to relieve that potential problem. New expensive medicines can be stealthy, too.
Kiplinger also notes taxes. But really, your taxes are pretty predictable, especially when you’re in retirement and have a relatively steady, predictable income stream. The stealth attack from taxes has actually dropped in Iowa, as the state has eliminated taxes on retirement plan payouts as well as Social Security.
Inflation is a huge stealth attack. Historically, it averages 3% a year, which means that in 24 years, the price of whatever it is you want will double. But every now and then we have spikes. Prices rose 1.4% in 2020, 7% in 2021 and then 6.5% in 2022. Prices don’t retreat from there, but continue that upward 3% climb. That’s a real cost — and stealthy, too — and it can’t be avoided.
