personal7: What are the costs after retirement? (v1.1)

Many working people wonder what their fixed costs will be after they retire. They wonder what will be the cost if they retire in Hawaii. Ours (two of us) is one data point that might help you. We however own our condo with no mortgage and own a car.

 

Our biggest expense is the variable costs like food, entertainment, clothes, appliances, home repair, etc. Most things you buy in shops in hawaii are expensive because they have to be flown or shipped here. Our next biggest fixed expense is our medical expenses and insurance costs. Medicare part D Drug cost copays especially is high. Generics are cheap but it is the non-generics that are expensive especially the specialty drugs. Many people don't effectively factor this in. Medicare advantage plan would be much cheaper in terms of premiums, but cost coverage is less overall, and we chose Original Medicare, Medicare supplemental plan and part D drug plan instead. Our next biggest fixed expense is HOA fees for our condo. HOA fees are expensive in Hawaii, but condo's give you a carefree retirement. Also, single family dwellings are very expensive in Hawaii, at-least in more desirable locales. Ways down the line we might have to move into an assisted living facility. We need to factor this in too.

 

With respect to drug costs, presidents after presidents for decades have failed to allow Medicare to negotiate drug prices and tamp down drug costs. Biden is the latest. The pharma industry has killed off all such efforts through an army of lobbyists and ad blitzes. I have given up on seeing this in my lifetime. However, there are some attempts to add some subset of this to build back better. If this happens that would be incredible. NOTE: SURPRISE!! A law was passed to cap the cost of selective drugs for seniors in the inflation reduction act and also cap out of pocket expenses for Medicare drug plan starting in 2025. Great!!.

 

There is nothing extraordinary about the rest of our costs. In retirement you save on 401K/TSA contributions, Medicare tax and social security tax. So, these really help. Also, Hawaii does not tax social security payments or pensions, so it is good for retirees.

 

Here is a breakdown of our most important costs (not including taxes).

 

1. Food, entertainment, repairs, home improvements, furniture/appliances, clothes, other purchases: varies. This adds up to a lot. This is the variable expense.

2. Health Insurance, Medicare premium, dental, vision, Long Term Care insurance: 1525/mo.

3. Condo HOA dues: $1140/mo.

4. Health copays (including part D Medicare copays): up to $500/mo.

5. Electricity: $300/mo. 

6. Car/home insurance: $200/mo.

Water/garbage services are covered by the condo.

Here is an essay on state level taxes: https://jaykasi.blogspot.com/2024/08/key-income-sources-for-state-governments.html

 We are fortunate to have plenty of financial room beyond these expenses.

Hope this helps.