4 Overlooked Expenses That Could Ruin Your Retirement

As you plan for retirement, you're probably thinking about all of the fun things that you are going to do with your money, like traveling, or enjoying all the hobbies you may not have had time for during your working years. Unfortunately, far too many people believe they're in good shape financially once they have enough money to fund this discretionary spending -- but they forget about some essential (and substantial) costs that they may end up incurring during their senior years.

In particular, there are four costs that often end up being overlooked. Sadly, if you forget about these, you could find yourself facing serious struggles as a senior. Here are some of those key costs you need to consider when making your retirement plans.

Image source: Getty Images.

1. Healthcare

According to Fidelity, a 65-year-old retiring in 2025 would face average out-of-pocket healthcare spending totaling $172,500. This money goes toward things like insurance premiums, copays, and paying for things that Medicare's health insurance doesn't cover.

If you don't plan for these costs, or for the potential costs of long-term care, then you could find yourself emptying your retirement plans far faster than you expected. That's especially true if you need a lot of prescription drugs, or you have serious medical issues.

Investing in a health savings account (HSA) is one way to prepare to cover these costs. You can do that if you have a high-deductible health plan and are eligible to put money into an HSA. But if you aren't eligible for an HSA, you should earmark some funds in your 401(k) or other retirement accounts, so you don't find yourself with huge medical bills and no way to pay them.

2. Taxes

Taxes are another cost far too many retirees overlook. Depending on where you live and how much you make, you may have to pay federal and state taxes on 401(k) and IRA distributions, as well as on pension income. You may even be taxed on your Social Security benefits if your income is high enough.

You can't afford to assume that taxes will go away once you get older and stop earning a traditional paycheck. In fact, tax rates are historically low right now, so you may find yourself paying a higher rate in your retirement years. You need to be prepared for that, and consider the impact of these taxes during your retirement planning process.

Alternatively, if you don't want to worry about taxes, you can try to invest most of your money in Roth IRAs or Roth 401(k) plans instead. This means you won't receive the up-front tax break, but you'll enjoy more tax savings in your later years.

3. Home repairs

Many retirees want to age in place. If you're one of them and you'll be staying in a home that you have lived in for a long time, it's important to realize that your home has been getting older along with you. This means you may have a lot of expensive repairs to undertake during your retirement years.

A new roof alone could be tens of thousands of dollars, not to mention things like an upgraded HVAC system. You may also need to invest in making your home more accessible as you get older, by adding features like entrance ramps or grab bars in the shower.

You should plan for these costs. Don't assume that just because your mortgage is paid off, your housing costs are going to be low or nonexistent. Otherwise, you could end up raiding your retirement accounts to cover that big roof leak, which could put you at risk of your money not lasting.

4. Adult children

According to a Savings.com survey, around half of all parents provide financial support to their kids. Surprisingly, many parents provide a lot of support; the Savings.com survey shows that the average amount totals $1,474 per month.

You may be hopeful that your kids will be self-sufficient once you're a senior. But if it turns out they aren't, you need to think about whether you'll cut them off, or step in to help foot the bills. If you'll be helping, then you need to factor this into your retirement planning, to make sure you have what you need to set your kids up for greater financial security.

By taking all four of these costs into account as you plan for your retirement, you can ensure that you have the money you truly need -- not just to do the fun stuff, but to cover the essentials without fear of going broke late in life. Don't forget these costs, or you could be left with major regrets.

The Motley Fool has a disclosure policy.