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The High Costs of the Retirement Dream

By WTOP Staff

Prohibitive expenses

Retirement typically involves saving enough money to pay all your bills without working. Retired households spend an average of $40,938 per year, according to the most recent Consumer Expenditure Survey conducted by the U.S. Bureau of Labor Statistics. Here’s how much it costs to retire in the U.S.:

Housing

Housing is typically the largest cost retirees face, averaging $14,034 among people age 65 and older. This amount includes $5,194 per year for owned property versus $1,818 for rented apartments. Utilities cost retirees $3,411 annually, with electricity being the largest charge. Mortgage interest and charges ($1,475), property taxes ($2,026) maintenance and insurance ($1,693) and household furnishings ($1,260) also add to the housing costs of retirees.

Food

Retirees age 65 and older spend an average of $5,126 annually on food. Most of this money is spent on meals at home ($3,301), with meat, poultry, fish and eggs ($687) and fruits and vegetables ($661) being the most expensive categories of food older Americans eat. They spend another $1,825 on food away from home.

Transportation

Driving costs tend to decline in retirement because retirees no longer need to commute to work. But retirees still need to get around. They spend an average of $6,651 annually on transportation, including the costs for gasoline, insurance, maintenance and repairs. Retirees also spend an average of $500 per year on public transportation.

Health care

Health care costs can increase in retirement, especially if your health care needs change due to illness. Retirees spend an average of $5,094 on health care, including health insurance, medical services, drugs and medical devices.

Entertainment

Retirees have a lot of newfound free time to fill, and often that ends up costing money. Those age 65 and older spend an average of $2,026 on entertainment, such as fees and admissions, audio and visual equipment and hobbies. They also spend an average of $403 on their pets.

Clothing

Although seniors no longer need work clothes in retirement, they still need to purchase new articles of clothing as they wear out. Retirees spend about $1,029 per year on apparel, including footwear.

Personal care

People age 65 and older purchase an average of $566 worth of personal care products and services, including shampoo and other hair care products, toothpaste and similar oral care tools, cosmetics, shaving and bath products.

Education

Retirees spend an average of $278 annually on education costs and $140 on reading materials, including books, newspapers and magazines. Retirees in the West and Northeast spend the most on continuing education.

Smoking

Seniors age 65 and older buy tobacco products, including cigarettes, cigars, loose smoking tobacco and smoking accessories that cost an average of $189 each year. Retirees in the Midwest and South spend more on smoking than retirees in the Northeast and West.

Charity

Retirees give away an average of $2,515 per year as cash contributions, perhaps as gifts to family members or donations to charitable, religious, educational or political organizations. Retirees in the Midwest are the most charitable, giving away $3,083.

More from U.S. News

10 Best Places to Retire on Social Security Alone

10 Retirement Lifestyles Worth Trying

10 Ways to Reduce the Cost of Retirement

The High Costs of the Retirement Dream originally appeared on usnews.com

Don’t Settle for Student Loans to Pay for Online Education

By WTOP Staff
Online college programs are becoming a more popular choice for prospective students, with one study finding that more than 6 million students enrolled in at least one online course in fall 2015. The popularity of these courses can be attributed in part to their flexibility with working adults' schedules, students' ability to progress more quickly through online programs and, oftentimes, cheaper tuition. [See 10 low-cost online bachelor's programs for out-of-state students.]Online degrees can be beneficial to many college students, but some studies have shown online learners complete their programs at lower rates than students at traditional brick-and-mortar campuses. Individuals with student loans but no degree comprise two-thirds of defaulted borrowers. Though these numbers are not encouraging, just like for traditional programs, there are ways to reduce how much you'll need to borrow for an online program to ensure you won't become one of these statistics. Don't just settle on borrowing student loans to cover the whole cost of your program and living expenses. Instead, start thinking about how to cut costs and cover your balance in different ways, such as the following. -- Grants and scholarships: Even though you are taking an online course, you can still apply and receive grants and scholarships. But your first step should be to complete the Free Application for Federal Student Aid, commonly referred to as the FAFSA, which will allow you to receive a Pell Grant if your expected family contribution is low enough. The EFC criteria and award amounts are adjusted annually, but the 2017-2018 academic year awards range from $606 to $5,920, which could significantly lower the amount you borrow annually. Your next step is to apply for scholarships. You can start by checking online scholarship search engines, such as the Salt Scholarship Search, College Board's BigFuture and Peterson's. But don't forget to take advantage of local organizations and your school's financial aid office. Both may offer scholarships that you can't find with a national scholarship search. [Review these 10 sites to kick off your scholarship search.]For instance, organizations like the Elks Club, Knights of Columbus or the Rotary Club typically offer scholarships annually to local students. Just because you're going to school online doesn't mean you're ineligible. Visit your local library for scholarship listings, and ask around town. You might be surprised how many local organizations offer scholarships. While these scholarships typically aren't large, every little bit counts. Each dollar you receive in a scholarship is a dollar you don't have to borrow and pay interest on. -- Work-study: Another option for online students may be work-study awards. Not all students enrolled in online programs are eligible, but students at some schools -- including, for example, SUNY Empire State College and Liberty University -- are. Work-study awards are not given upfront like scholarships and grants. In most cases, they are an offer to earn up to the awarded amount if you secure an eligible work-study job. While there is a misconception that all work-study jobs must be on campus, students can work for off-campus, nonprofit or public employers as long as the work is in the public's interest. You may be able to work for a for-profit employer if the job is relevant to your course of study. No matter who the outside employer is, it will need to have an established agreement with your college for you to receive work-study funds. Remember, to be eligible for federal financial aid, you must be enrolled and pursuing a degree or certificate. If you're not working toward a credential, Pell Grants and work-study won't be option, but you may still be able to take advantage of private scholarships -- just be sure to read the eligibility criteria carefully. [Explore what to know about financial aid in online programs.]-- Pay as you go: One of the great benefits to enrolling online is the flexible schedule, which can allow you to complete your college coursework around your responsibilities. But prospective students often overlook using their part- or full-time job earnings as an option for paying for college. Almost 80 percent of college students in 2015 worked at least part time while attending classes, according to the National Center for Education Statistics. By budgeting and thinking strategically about your college costs, you can likely reduce your dependence on student loans by paying a portion out of pocket. Many -- but not all -- online programs are less expensive than traditional programs and often have shorter payment periods. Six, eight or 10 weeks are common course durations. Because of the frequency of payments in an online setting, you may be well-placed to pay as you go and possibly avoid borrowing altogether. Attending college online and avoiding student loans may be challenging, but if you are willing to put in the effort, you can limit the amount you need to borrow. More from U.S. News Q&A: Understanding Student Loan Discharge Eligibility Student Loan Refinancing Isn't Right for All Borrowers
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