3 retirement risks that older Americans often forget to budget for. How to protect your nest egg (2025)

Maurie Backman

Sun, Apr 20, 2025, 6:03 AM 5 min read

Planning for retirement is something that’s best to do throughout your career, not just when you’re approaching that milestone and have a year or two left to work.

Only half of Americans have tried to calculate how much money they'll need in retirement, according to a 2024 survey by the Employee Benefits Research Institute (EBRI).

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However, among those workers who did the calculation, 52% were inspired to save more. Even if you feel confident in your ability to cover your retirement expenses, it’s important to be mindful of hidden costs that could impact your retirement finances. Here are three to keep on your radar.

Healthcare expenses not covered by Medicare

Fidelity Investments expects the typical 65-year-old to spend $165,000 on healthcare during retirement. That may sound surprising, but even with Medicare coverage, several expenses could arise.

For one thing, Medicare isn't entirely free. Most enrollees don't pay a premium for Part A, which covers hospital care. However, Part B, which covers outpatient care, charges a monthly premium, as do some Part D drug and Medicare Advantage plans. Plus, higher earners risk surcharges on their Medicare premiums.

Premiums aside, there are a number of expenses that original Medicare (Parts A and B plus a Part D drug plan) does not cover, which retirees commonly need. These include dental care, eye exams, prescription glasses and hearing aids.

You’ll also face copays and coinsurance under Medicare that you must pay out of pocket. If enrolled in original Medicare, you can buy supplemental insurance known as Medigap to help offset those costs. But then you’re looking at premiums for Medigap, too.

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It's a big misconception that Medicare will pay for you to live in a nursing home or cover the cost of a home health aide. Medicare's scope of coverage is typically limited to medical issues only. So while Medicare might pay for rehab or physical therapy because you broke a hip, it won't pay for a home health aide because you're getting older and need help dressing yourself and using your kitchen.