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Unlike golf, there are no mulligans when preparing for retirement. Accurately calculating your retirement expenses is one essential part of the formula. Unfortunately, over 50 percent of Americans underestimate the expenses they’ll have in retirement.1

Here are six of the most common big-ticket items that many individuals often overlook when it comes to creating a retirement strategy.

Six Most Miscalculated Retirement Expenses

    1. Healthcare: More than three out of four baby boomers have never estimated health-care expenses. When asked what they would estimate them to be, 69 percent replied “$100,000 or less,” falling short of the $265,000 cost that the average couple is expected to incur during retirement.2
    2. Housing: Even if you expect to pay off your mortgage prior to retirement, the costs of running a home can rise at a rate higher than anticipated. It's important to take into account utilities, home maintenance, repairs and more.
    3. Entertainment/Hobbies: In retirement, many people turn to entertainment, hobbies, and other activities, which often cost money to fill their newly free time. Estimating the true cost of this new or expanded expense can be difficult.
    4. Extended Care: The federal government estimates that 70 percent of Americans will need some type of extended care at some point.3 The average monthly cost for a nursing home is nearly $7,000 and for an assisted living facility the cost tops $3,000.4
    5. Taxes: In one survey of retirees, the amount of taxes retirees paid in retirement was their biggest surprise.5,6
    6. Giving to Adult Children: Gifts to adult children and grandchildren is hard to estimate since the events that may prompt gifts are unknowable.6

As your retirement day approaches, revisiting your spending assumptions may be one of the most important steps you can take in assessing your retirement preparation.

1. Journal of Accountancy, November 2015

2. Voya Financial, 2018

3. U.S Department of Health & Human Services, 2018

4. U.S Department of Health & Human Services, 2018

5. Lincoln Financial Group, 2018

6. Keep in mind this article is not a replacement for real-life advice, so make sure to consult your tax, legal and accounting professionals before modifying your tax strategy.