The Big Surprising Cost In Retirement No One Plans For, But Should

Retirement

“How could we have forgotten that?!” Retirement requires more than money and good health.Getty

After years of saving, planning and investing, Marion and Phil are enjoying an active retirement. Phil has thrown himself into the outdoor activities he rarely had time for when he was an electrician –fishing, gardening and long walks with his dog. Marion, retired from 30-plus years of teaching, now spends her time caring part-time for their new granddaughter and volunteering at the town library.

Phil and Marion have it all – they have time, money and good health. But, an active retirement needs more. They recently bought a new SUV to keep their retirement on the go.

A retirement reward to themselves? Not really. For most older Americans, including Marion and Phil, driving is not a choice, it is a necessity Transportation is often taken for granted but it is critical to living well at any age.

Yet most people, including many financial advisors, are surprised to learn that transportation is the second largest cost in retirement. According to the Bureau of Labor Statistics the top five expenses for people 65 years old and older are:

  1. Housing
  2. Transportation
  3. Health
  4. Entertainment
  5. Food

Transportation costs an average 65-year old head of household more than $7,100 a year compared to healthcare, which is often, and incorrectly, identified as the second greatest expense in retirement at $6,300 annually. Transportation expenses include vehicle purchase, fuel, and maintenance, insurance as well as public and other transportation services.

While transportation can be described as simply moving from point A to point B, it is more, much more. Before you do anything you have to get there first. Research done by my colleagues at the MIT Center for Transportation & Logistics and AgeLab shows that transportation is the very glue that holds all the big and little things that make up life together.

The common, but mistaken, assumption is that people will travel less in retirement; after all they are no longer working and commuting. But, retirement is not a short staid period of rest and relaxation. Today’s retirees are traveling more than previous generations. According to the National Household Travel Survey, older adults in 1983 made only 1.8 trips per day, compared to 3.2 trips per day made by Americans 65-plus in 2017. In fact, today’s retiree is making nearly as many daily trips as people between the ages of 21 and 35 years old that take 3.4 trips daily.

Driving is the primary travel mode of choice in retirement. Nearly 70 percent of people over 50 years old live in suburban and rural areas where public transportation and other desirable mobility alternatives are either few, or non-existent.

Unfortunately, driving may not be a lifelong option for some. The recent car accident involving 97-year old Prince Philip at the wheel put the issue of older driver safety in the news once again. The issue of older drivers is a perennial media topic that is often trapped between humor and horror. Yet there is no consensus in the scientific literature about what is, or is not, an older driver.

People typically view anyone 20 years older than themselves to be an older driver but there is little evidence to demonstrate that birthdays are a hazard versus the risks posed by multiple medications and health conditions that may make drivers of any age a risk. As a result, state driver licensing authorities differ widely on what age to test, how to test, and even if there should be age-based testing at all.

Although most people are likely to be able to drive and self-regulate when, and how best to safely drive well into older age, retirement planning should include how to remain mobile if driving is no longer an option.

Ultimately, transportation options are determined by where you live. An overwhelming number of older adults are aging in the suburbs and exurbs making many of their transportation options imperfect. Given the very nature of the suburbs where there is distance between homes, shopping and other activity centers – that distance may become a formidable barrier to walking.

Public transportation is often unavailable. Moreover, if you are not well enough to drive, and have not taken the bus or train for decades, it is unlikely that one day you will wake up and say hey, it’s a great day to take the bus!

Lyft, SilverRide, Uber, local taxis and other options tend to serve larger urban metropolitan areas. However, if available, they should be considered as part of an overall retirement transportation budget.

Friends and family are typically the number one transportation alternative after driving yourself. However, this option often limits the trips considered important enough to ask for a ride. As Marion describes it, she is always happy to give a neighbor a ride to the grocery store or to the doctor’s office. But, food shopping and having your blood pressure checked may be life’s necessity trips, but they are not trips that contribute to quality of life. Ask yourself, do I have a list of people that I would not hesitate to ask for a ride to visit another friend, to grab a cup of coffee or simply just to get out?

Likewise, transportation alternatives offered by local community organizations (Senior Centers, Councils on Aging, faith-based organizations) may be available, but are often limited to shopping trips on designated days and hours. While vital, these services do not provide the mobility that support an active retirement where going for an ice cream cone is decided in the moment, not days in advance.

The new vision of retirement is active living. Whether that active life is Phil’s fishing trips, Marion’s volunteering, or simply having the freedom to decide at any given moment to get up and go, transportation is a vital part of comprehensive retirement planning.

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