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No paycheck, no plan, no clue? 5 things that hit retirees hardest in Year One

Cassidy HortonDecember 1, 2025 at 6:03 PM

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No paycheck, no plan, no clue? 5 things that hit retirees hardest in Year One (Klaus Vedfelt via Getty Images)

You can spend decades planning for retirement — running the numbers, maxing out accounts, imagining slow mornings and long lunches — and still be surprised by what the first year actually feels like.

It’s one of the biggest life transitions most people ever go through. And even the most prepared retirees say the same thing: “I didn’t expect it to feel like this.”

Here are five big surprises worth preparing for so your first year feels a little steadier and a lot less overwhelming.

⭐ Must read: 7 big changes coming to Social Security in 2026 (one that could shrink your check)

1. The emotional shift from “earning” to “spending” hits harder than you think

You’ve most likely spent at least 40 years watching your savings grow. Then retirement hits, and suddenly the math flips — you’re withdrawing instead of contributing.

For some people, this is no big deal. But for many? It feels like stepping off a treadmill that’s been on for decades.

The emotional surprises -

Guilt every time you tap your retirement savings

Worrying you’ll run out of money — even when the math says otherwise

Missing the structure, purpose and identity work gave you

How much you miss coworkers and casual office interactions

What to do about it -

Set up a retirement paycheck — a monthly auto-transfer from investments — so withdrawals feel like income, rather than random dips.

Build a loose weekly routine with anchors — like a volunteer shift, a workout class or coffee with a friend.

Give yourself 6 to 12 months to adjust before making any major decisions.

🔍 Read more: Retirees warn: Don't make these 9 Social Security mistakes

2. Healthcare costs jump — even for healthy retirees

Medicare is fantastic, but it isn’t free. And it doesn’t cover as much as you might expect. The first year is when the gaps become more obvious (and expensive).

The cost surprises -

Medigap or Medicare Advantage premiums

Dental, hearing and vision — none covered by Medicare Part A or B

Prescription costs that fall into coverage “gaps”

Long-term care decisions — whether to buy coverage, self-insure or wait

Higher out-of-pocket limits than most employer plans

The sticker shock is real. A recent Fidelity estimate puts lifetime healthcare costs for a 65-year-old couple at around $330,000. And a surprising chunk hits in Year One.

What to do about it -

Compare Medigap vs. Medicare Advantage at least six months before you turn 65.

Build a separate “healthcare buffer” into your budget for dental work, new glasses or hearing aids.

Decide on your long-term care strategy early — before a health scare forces the conversation.

🔍 Read more: 6 simple ways to save money on your prescriptions (without skipping your meds)

3. Your days get longer and your relationships get … closer

When you retire, you may assume the hardest part is having no paycheck. But the daily structure shift is just as big.

The time surprises -

Going from 4 hours a day with your spouse to the whole 24 — with no clear roles.

Feeling pressured to say “yes” to every request because you’re “retired and not busy.”

Weekend hobbies that lose their appeal when you can do them every day.

Missing being needed in the specific way work provided you.

What to do about it -

Talk openly with your partner about alone time, shared routines and expectations before you retire.

Build two or three “purpose anchors” into each week — volunteering, part-time work, mentoring or recurring social plans.

Give yourself permission to protect your time — retirement doesn’t mean you’re endlessly available.

🔍 Read more: 7 smart devices that tackle the biggest dangers of aging at home

4. Taxes get more complicated

Many people assume that retirement simplifies your taxes. But Year One can be the most confusing, because everything shifts at once.

The tax surprises -

Social Security is taxable. Up to 85% of your benefit can be taxed, depending on your income.

RMDs from traditional IRAs and 401(k)s start at 73. And your withdrawal strategy could push you into a higher tax bracket.

Pensions are federally taxable. And many states tax them too.

Capital gains stack up fast. Selling investments to fund your retirement or downsizing your home can trigger unexpected five-figure tax bills.

State tax rules vary widely. Moving to Florida versus California can change your tax bill by the thousands.

What to do about it -

Understand your tax buckets — taxable accounts, tax-deferred accounts and tax-free accounts.

Map out a withdrawal plan that minimizes lifetime taxes — and not just this year’s bill.

Run Social Security scenarios — and include taxes, not just benefit amounts.

Meet with a CPA at least once a year. And don’t wait: Many tax-savings strategies require setup before January 1.

Do your research before relocating. Florida has no income tax but high property taxes and insurance costs. Oregon taxes Social Security but with lower property taxes. Where you live can cost (or save) you thousands.

🔍 Read more: 13 big tax changes coming in 2026 that may boost your refund — or shrink it

5. Your spending may not drop the way people say it will

There’s an old rule of thumb that you’ll spend 70% to 80% of your pre-retirement once you retire. In your first year? That amount could be wildly off.

The spending surprises -

“Use it or lose it” travel. Now’s the time those bucket-list trips move from “someday” to “right now” — especially while you’re healthy.

The home projects backlog — everything from that new roof or kitchen remodel you’ve waited for to safety and mobility upgrades to help you age in your home.

Inflation vs. fixed income. You used to get raises, and now your pension and Social Security can’t keep pace with groceries, medical costs and property taxes climbing 3% to 5% a year.

Hidden hobby costs. Golf equipment and pickleball leagues aren’t cheap!

The grandparent ATM. College fund contributions, down payment support or just spoiling your grandkids adds to the budget.

What to do about it -

Build a Year One “transition fund.” Aim for at least 15% of your annual expenses to cover travel splurges, home projects and family support.

Track every dollar for the first 90 days. Use Mint, YNAB or a spreadsheet to understand real data and spending patterns.

Review your budget monthly, not annually. Check spending against your budget every 30 days for the first six months, and then quarterly. Don’t wait until December to realize you’re overspending.

🔍 Read more: Medical debt, forgotten 401(k)s, no care plan: What to fix before retirement hits

The bottom line: The first year is a test run, not your final plan

You won’t get everything right in your first year of retirement — you’ll need to tweak your budget, evolve your routines and shift your assumptions about “retired life.” Stay flexible, curious and aware of the changes coming your way. And seek the help of a professional when you need it.

The best retirement isn’t the one you planned perfectly. It’s the one you’re willing to keep improving for the retirement that fits your life, and not someone else’s formula.

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About the writer

Cassidy Horton is a finance writer who specializes in banking, insurance, lending and paying down debt. Her expertise has been featured in NerdWallet, Forbes, MarketWatch, CNN, USA Today, Money, The Balance and Consumer Affairs, among other top financial publications. Cassidy first became interested in personal finance after paying off $18,000 in debt in 10 months of graduation with an MBA. Today, she's committed to empowering people to stand up and take charge of their financial futures.

Article edited by Kelly Suzan Waggoner

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Source: “AOL Money”