Retirement Blind Spots: Why Only 5% of Retirees Live Their Dream Retirement
A comfortable retirement doesn’t come with a fixed price tag. According to Fortune magazine, only 5% of retirees say they’re “living the dream” while a concerning 19% report they’re “struggling” or “living the nightmare.” Expenses can change over time, and some of the most important ones are easy to overlook. That’s one reason about 45% of retirees could run out of money in retirement.
The good news? That outcome isn’t inevitable. The key is recognizing which costs get overlooked and building flexibility into your financial plan. Let’s explore five common blind spots and what you can do to prepare.
1. Overspending Day to Day
Small spending shifts can snowball quickly in retirement. Recent data shows that nearly 1 in 3 retirees spend more than they can afford—a rate almost double that of 2020. Meanwhile, just 59% keep at least three months of emergency savings, and more than one-third face surprise expenses that strain their budgets.
For many retirees, the challenge isn’t just inflation. Lifestyle changes, family support, or higher everyday costs can all make budgets tighter than expected.
Planning tip: Track spending carefully, revisit your budget often, and leave room for surprises. A comprehensive financial plan can help you enjoy retirement without sacrificing long-term security.
2. Underestimating Healthcare Costs
Healthcare is one of the most underestimated retirement expenses. Even with Medicare, out-of-pocket costs for premiums, prescriptions, and uncovered services can be significant.
According to Fidelity Investments 2025 Study, a 65-year-old retiring in 2025 could expect to spend about $172,500 on healthcare alone, excluding long-term care.
Health care is among the largest retirement expenses, typically second only to housing.
Long-term care is even more daunting: a private nursing home room averaged $127,750 per year in 2024, while assisted living cost about $70,800. In South Jersey and Philadelphia specifically, nursing home costs average around $6,100-$7,900 per month ($73,200-$94,800 annually), with specialized memory care facilities in Marlton running $8,350-$10,350 monthly.
Planning tip: Model realistic healthcare scenarios into your plan and revisit them regularly. Consider supplemental coverage, long-term care planning, and a medical expense cushion.
3. Overlooking Housing Expenses
Even if the mortgage is paid off, housing costs don’t disappear. In 2021, more than 11.2 million older adults spent at least 30% of their income on housing—a record high and a 15.5% increase since 2016.
Add in maintenance, rising property taxes, unexpected repairs, and potential relocation costs, and housing can take a bigger bite than planned.
Planning tip: Anticipate both predictable costs (insurance, utilities) and the big-ticket surprises (repairs, moves). That foresight can give you flexibility to live where—and how—you want.
4. Supporting Adult Children
Good intentions can quietly drain retirement savings. About 50% of parents routinely provide financial support to adult children—averaging $1,474 a month. Most of that goes to essentials like groceries, healthcare, and housing.
But here’s the tradeoff: many parents say they would deplete retirement savings, delay retirement, or even return to work to keep helping their kids.
Planning tip: Decide ahead of time how and when you’re willing to provide support. Setting boundaries preserves your independence while still allowing you to help loved ones. A family financial strategy can help balance these competing priorities.
5. Ignoring Hidden Tax Triggers
Taxes don’t retire when you do. Without a strategy, they can take a serious toll.
- RMDs: Miss a required minimum distribution? You could face a 25% excise tax (10% if corrected within two years).
- Social Security: Claiming at 62 instead of full retirement age can permanently reduce monthly benefits by ~30%.
- Medicare: While monthly Part B premiums start at $185.00 per month and $0 for Part D for married couples earning less than $212,000 or $106,000 for individuals, higher incomes can quickly trigger tiered surcharges on Medicare Part B and D premiums. This can raise Part B to $591.90 per month and Part D to $78.60 from $0 for individuals earning $200,000 including RMDs, potentially adding hundreds or thousands per year.
Planning tip: Build a proactive tax planning strategy before retirement. Coordinating withdrawals, Social Security timing, and Medicare planning can help you keep more of what you’ve earned.
6. Sacrificing Retirement for College Funding
One of the most common financial missteps is prioritizing children’s college education at the expense of retirement savings. While the intention is admirable, this approach can be financially devastating long-term.
Remember this crucial difference: You can borrow for college, but you can’t borrow for retirement. Students have access to financial aid, federally guaranteed student loans, grants, scholarships, and work-study programs. Retirees have no such safety net once their savings are depleted.
Many parents find themselves with inadequate retirement funds after paying for multiple college educations, only to discover they need to work years longer than planned or dramatically reduce their standard of living in retirement.
Planning tip: Establish clear boundaries between college and retirement funds. Consider the “oxygen mask principle”—secure your own financial future first, then help your children. Explore college funding alternatives like community college transfer programs, in-state tuition options, or schools offering generous merit aid packages. A college funding strategy that doesn’t compromise your retirement is possible with proper planning.
7. Expecting the Unexpected
Economic forces beyond your control can dramatically impact your retirement security. Recent research shows that the top three concerns plaguing retirees in 2025 are:
- Inflation (92% of retirees are at least slightly concerned)
- Rising healthcare costs (85%)
- Potential for a major market downturn (80%)
While these concerns may be unnerving and unpredictable, they shouldn’t derail a secure retirement if you stay focused on the variables that are in your control: your monthly savings rate, participation in tax-advantaged retirement accounts, your diversification strategy, and your planned retirement age.
Planning tip: Build flexibility into your retirement plan to account for market volatility and inflation. Consider keeping a portion of your portfolio in growth investments even during retirement to help combat inflation’s impact on your purchasing power.
The Bigger Picture
Retirement planning isn’t about eliminating every risk. It’s about preparing for both the known and the unknown.
Inflation, travel splurges, unexpected caregiving, new diagnoses, even scams targeting older adults—all can reshape your retirement costs. The goal is resilience: a plan flexible enough to absorb shocks without throwing your lifestyle off track.
Most concerning is that 62% of retirees say they have no idea how long their savings will last. Without professional guidance, many find themselves financially unprepared for retirement’s actual costs.
Don’t Navigate Retirement Planning Alone
At Financial Life Planning, we understand that retirement planning involves more than just saving money—it requires a comprehensive strategy that accounts for all these potential blind spots. Our experienced financial advisors in South Jersey and Philadelphia specialize in creating customized retirement plans that address these often-overlooked expenses.
Retirement security doesn’t happen by chance—it requires planning and discipline. By taking control of the variables you can manage, your retirement dreams can be within reach, helping you join the 5% who are truly “living the dream” in retirement.
Ready to build a retirement plan that anticipates these hidden costs? Schedule your free consultation today and discover how we can help you create a retirement strategy that provides both financial security and peace of mind. Our team will work with you to develop a personalized approach to retirement that accounts for healthcare costs, housing expenses, family support, and tax optimization.
Visit our retirement planning resources to learn more about how to prepare for a financially secure future.
Edward C. Goldstein, CFP®, MBA, President
CERTIFIED FINANCIAL PLANNER ™ Practitioner
Financial Life Planning, LLC
10,000 Lincoln Dr. East, Suite 201
Marlton, NJ 08053
Phone: 856-988-5480
Fax: 908-292-1040
