The One Thing That Makes an Upper-Class Retirement 10 Times More Expensive, According to Experts
Written by
Cara Danielle Brown
Edited by
Amen Oyiboke
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Upper-class retirements tend to look a bit cushier than their middle-class counterparts. And that’s because many upper-class individuals (those with net worths above $714,000, per the Federal Reserve Economic Data) choose to maintain their affluent lifestyle far beyond their working years. Honestly, who can blame them?
But, while additional amenities may be satisfying, certain expenses can make retirement far more costly if individuals aren’t careful. So what’s the one, elective expenditure financial experts agree makes an upper-class retirement up to ten times more expensive? Housing.
Christine Mueller Coley, senior vice president and wealth advisor at SteelPeak Wealth, said that many of her upper-class retirees purchased large, luxury homes to accommodate family visits and serve as status symbols. However, they never took into account the costs of upkeep, furniture, property taxes and homeowners’ insurance. These retirees were then on the hook for much more than they had bargained for.
“Home insurance alone has increased 8% higher than average inflation rates from 2018 to 2022 per the U.S. Treasury Department,” said Coley. “Property taxes have also skyrocketed with the increase in housing prices — since 2019, the average property tax bill has increased 27%.” Then there are the costs of cleaning, lawn care, plumbing repairs, and home improvement projects. The home’s sticker price rarely tells the full story.
According to Herman Thompson Jr., certified financial planner at Innovative Financial Group, many upper-class retirees also choose exotic locations for those luxury homes, thereby driving up costs even further.
“Retiring somewhere exotic sounds exciting, but it comes with its own challenges,” said Thompson Jr. “Beaches have hurricanes, mountains have landslides, forests have fires and all of them have insurance challenges.”
Additionally, exotic locations are often far away from family and friends, resulting in increased travel costs for both themselves and the individuals they hoped would visit. Even “simple things like having a friend give you a ride to the doctor’s office becomes an expensive Uber trip.”
How Can Upper-Class Retirees Avoid Unforeseen Housing Expenses?
Downsize
“The cost for larger spaces may not be feasible in the long run,” said Coley, who explained retirees initially want extra space for company and holiday entertaining, but later lament that the space is too expensive to maintain and they don’t need as large a house as they thought. Choosing to invest in a more modest home or condominium could be a huge money-saver long-term.
Live Near Your Support System
Thompson Jr. stated abandoning your existing social network in retirement is a risky venture. Not only can it lead to paying for services a support network might provide for free, but travel expenses can and will mount. Do yourself and your wallet a favor by living near family and friends.
Stop Trying To Impress Other People
While that luxury home may set tongues wagging, what is the real payoff if it’s adding undue stress? Your golden years are a time to relax and enjoy yourself — not refinance. Ignore social pressures and stop trying to keep up with the Joneses.
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