5 Things That Will Ruin Your Retirement Monthly Budget

December 5, 2016 — 11:48 AM EST

Living on a fixed income is easier said than done. Even retirees who are well-prepared and have checked off all of the financial “to do” items before leaving the workforce, such as paying off their home, are surprised at how challenging it can be to balance a monthly budget. One thing after another conspires to undermine carefully sculpted plans, so it’s not surprising that 41% of Americans age 50 and older who were recently surveyed by the Associated Press -NORC Center for Public Affairs Research said that they feel more anxious than excited about retirement.

That anxiety is related to personal finances; 43%  with incomes below $50,000 are anxious about their retirement. On the other hand, 53% say they feel more excited than anxious about it.

Staying on track with finances requires knowing exactly where your money is going. With that in mind, we offer the following list of five things that can blow a monthly budget in retirement. We're going to leave medical emergencies off this tally because you don't need us to tell you what a health crisis can do to your budget.

1. Hobbies

There are hobbies people take up that don’t cost a thing, such as walking and bird watching. There are hobbies that can be fairly expensive, such as golfing or scuba diving. And there are hobbies that will break the bank: collecting vintage cars or buying a boat. How expensive your favorite pastime is will have a big impact on your monthly budget. One round of golf at famed Pebble Beach, for example, will run you about $495. A new set of the latest and greatest golf clubs purchased at Golf Town can cost more than $1,000.

Often the more interested people get in their hobbies, the more money they are willing to invest in them, until they get to a point where they have spent too much. The good news is that there are ways to enjoy a hobby on a budget. Golfing at a local municipal course, for example, can cost as little as $15 per round, while a secondhand set of golf clubs can be purchased on eBay for well under $500. The key is to track how much money you’re spending to keep yourself active and engaged.

2. Travel

Traveling in retirement has become a cliché. Every retirement commercial on television seems to feature one happy couple after another sailing on a yacht, lying on a beach, dancing on a cruise ship or exploring an exotic locale.

All that travel can cost you – and the farther you go, the pricier it gets. The average hotel in Geneva, Switzerland, costs $268 per night, according to “U.S. News & World Report.” A round-trip flight from Boston to Geneva will set you back nearly $1,000. Cruise ship vacations and sun destinations aren’t cheap, either. According to the website Cruise Market Watch, people spent $222 per day on average on a cruise line vacation in 2015. The cost of Caribbean vacations ranges from $5,000 on the low end to more than $10,000 at the high end of the spectrum. 

As with hobbies, there are ways to lessen the expense of traveling. Watch for discounts, travel when it is not peak season and be sure to pay off one vacation before booking another. Most Senior-Friendly Cruise Destinations can help.

“Great ways to keep travel costs under control include shopping around for deals, not solely relying on one travel agent or service, booking well in advance, and looking outside traditional transportation and room and board services. Start-up companies like Uber and Airbnb provide affordable alternatives to renting a car and staying at the local resort,” says Mark Hebner, founder and president, Index Fund Advisors, Inc., in Irvine, Calif., and author of “Index Funds: The 12-Step Recovery Program for Active Investors.”

3. Home Improvements

Staying home won't necessarily save you money either – if you catch renovation fever, that is. You worked hard all your life and now that you're staying home more (and maybe your house has gotten a bit worn over the years), you deserve the kitchen of your dreams or that sprawling cedar deck perfect for family barbecues.

Not so fast. Home renovations cost a lot at any stage of life. When you’re on a fixed monthly income, they can blow a budget faster than you can say “two by four.”

The website Houzz has compiled the average costs for a variety of home renovation projects throughout the United States. Remodeling a kitchen, for example, comes to $28,070. Redoing a bathroom is less expensive, at an average cost of $11,566. (For more, see Bathroom Remodeling on a Budget.) But a full house makeover? The average spent is just above $200,000.

Financially speaking, it pays to be handy and undertake renovations yourself. The federal government has information and resources available to help people make smart decisions when it comes to home improvements, as well as programs that seniors can take advantage of to modify their home.  

4. Car Repairs

You can file this one away under “Death by a Thousand Cuts.” Car breakdowns occur without warning and are difficult to plan for in a monthly budget. And whether it is a comparatively inexpensive repair that’s needed, such as replacing the headlight bulbs (typically about $130), or really expensive repairs, such as replacing a blown head gasket (as much as $1,500), car repairs add up and can throw a retirement budget into turmoil.

While you can do some car fixes yourself, most require the services of a licensed mechanic who is qualified to repair a vehicle safely – and mechanics aren’t cheap. This type of unexpected cost can be offset through an emergency fund that you put cash into each month in the event that something goes wrong. It also helps to have a family member or friend who is a mechanic and can give you a discount on automotive services.

“Make sure to get several opinions and price quotes on parts that can be used. Aftermarket parts or going to a ‘pull and save’ car lot can save you as much as 80% over buying through a dealership,” says Carlos Dias Jr., wealth manager, Excel Tax & Wealth Group, Lake Mary, Fla.

5. Spoiling Loved Ones

Being a grandparent today is not cheap. A study by insurer MetLife found that 62% of grandparents have provided financial support or monetary gifts to their grandchildren; over five years the average amount spent on all grandchildren was $8,289. That’s a lot of money.

Many retirees continue to support their adult children. A Pew Research Center analysis, released last month and based on U.S. Census Bureau data, reports that in 2014, for young adults ages 18 to 34, residing with a parent is the most common living arrangement, with just over 32% doing so. That is the first time on record for the statistic.

Financial advisors and online websites are increasingly providing advice to retirees on how to “cut the cord” with their loved ones.

“If you’re retired and living on a monthly budget, sometimes you just have to say no. And that’s OK. You don’t love them any less. You’d like to help them out, just not at the expense of self-sacrifice. Hopefully they’ll respect you for it. And if not, they may need to hear a few more nos anyway,” says Alyssa Marks, lead financial advisor, CMFS Group, Inc., Morton, Ill.

It becomes too expensive for older people to continue spending too much on children and grandchildren. It is one thing if you have unlimited resources, but if you are surviving on a strict monthly budget, you need to be cautious. Keep your gifts in line with what you can actually afford. Think ice cream cones, not trips to Disney World.

The Bottom Line

Successful budgeting starts by knowing where your money is going each month. Track expenses and see if you are overspending and whether there are places where you need to cut back. Find more affordable ways to do the things you enjoy and always keep an eye out for discounts and bargains (Senior Discounts So Soon? can help).  

Above all, be realistic about what you can afford and know when to say “No” – to yourself and to others. (For more, see Top Tips for Not Outliving Your Retirement Budget.)