Why Many FRS Members Underestimate Their Retirement Expenses

For many Florida Retirement System (FRS) members—especially firefighters, law enforcement officers, and other public employees—retirement planning often starts with a simple question:

“Will my pension and savings be enough?”

A big part of the answer depends on how accurately you estimate your retirement expenses, and that’s where many people run into trouble. It’s very common for FRS members to underestimate what they’ll actually spend once they stop working.

This post walks through why that happens and the main areas where costs are often higher than expected, so you can plan with clearer eyes.

🔍 Reason 1: Assuming Expenses Drop Dramatically in Retirement

A common belief is:

“Once I retire, my expenses will go way down.”

Some costs may drop—like commuting, uniforms, or eating out at work—but many retirees find that everyday spending doesn’t fall as much as they expected.

Why this happens:

• You have more free time, which can mean more travel, hobbies, and dining out.

• You may take on home projects you didn’t have time for while working.

• You might spend more on family, such as helping children, grandchildren, or aging parents.

Takeaway:
Don’t assume your spending will naturally shrink. In many cases, it simply shifts—from work-related costs to lifestyle-related costs.

Reason 2: Underestimating Health Insurance and Medical Costs

For FRS members who retire before age 65, the cost of health insurance can be one of the biggest surprises.

Potential costs include:

• Employer retiree coverage at full cost

• ACA/Marketplace plans

• COBRA for short-term coverage

• Medicare premiums and supplements after age 65

• Out-of-pocket costs: copays, prescriptions, dental, vision, and hearing care

The Health Insurance Subsidy (HIS) helps, but it’s important to see it realistically:

• HIS pays $7.50 per month for each year of creditable service, up to $225 per month.

• It helps offset premiums but typically does not cover them entirely.

Takeaway:
Health insurance and medical costs are often higher and more variable than people expect. They deserve their own line item in a retirement budget, not just a rough guess.

Reason 3: Housing and Home-Related Costs Don’t Disappear

Even if your mortgage is paid off, housing is rarely “free” in retirement.

Common ongoing costs include:

• Property taxes

• Homeowners insurance (which can be significant in Florida)

• Flood or windstorm coverage, if applicable

• Maintenance and repairs

• Upgrades or renovations over time

Many retirees also underestimate how often major items need replacement—roof, HVAC, appliances, windows, flooring, etc.

Takeaway:
A realistic retirement budget assumes ongoing housing costs and periodic large expenses, not just a mortgage or rent line.

Reason 4: Transportation and Lifestyle Costs Stay Real

Retirement doesn’t eliminate car payments, gas, insurance, or maintenance. In some cases, it can even increase travel-related costs:

• More time for road trips, vacations, and visiting family

• Higher vehicle use for errands, hobbies, or volunteer work

• Possible desire for a newer, more comfortable vehicle in retirement

Even if you own your vehicles outright, you still face insurance, maintenance, and eventual replacement.

Takeaway:
Transportation doesn’t go away in retirement—it simply shifts from commuting to lifestyle.

Reason 5: Inflation Slowly Increases Costs

Inflation is often underestimated because it happens gradually. Over 15–20 years, even moderate inflation can significantly increase the cost of:

• Groceries and utilities

• Insurance premiums

• Medical expenses

• Everyday services

For many FRS members:

• Service earned before July 1, 2011 may receive a fractional COLA.

• Service earned after that date receives no COLA.

That means a large portion of future retirees will see their pension stay flat while prices rise.

Takeaway:
A budget that looks comfortable at age 55 or 60 may feel much tighter at 75 or 80 if inflation isn’t considered.

Reason 6: Forgetting Irregular but Inevitable Big Expenses

Some expenses don’t show up every month, but they do often show up eventually:

• Home repairs (roof, HVAC, plumbing, etc.)

• Major car repairs or replacements

• Medical procedures not fully covered by insurance

• Family events—weddings, college support, helping adult children

• Natural disaster prep or recovery costs

Because these aren’t monthly bills, they’re easy to overlook when sketching a quick retirement budget.

Takeaway:
A sound plan includes a reserve or “big expenses fund” for those non-monthly but predictable costs.

Reason 7: Not Matching Income Timing to Expense Timing

Many FRS members think of retirement in terms of income sources:

• Pension

• DROP or Investment Plan assets

• Social Security

• HIS benefit

But the timing matters just as much as the amounts.

Questions that affect expense planning:

• Will you have a gap between retiring and collecting Social Security?

• Will you have a gap between retiring and Medicare at age 65?

• Will you use DROP or Investment Plan funds early, or save them for later?

If income is lower or more variable in the early years, but expenses are higher (due to travel, health coverage, etc.), it can create a mismatch that catches people off guard.

Takeaway:
Retirement planning isn’t just “how much per month,” it’s also “when” income and expenses occur.

Final Thoughts

For FRS members, the pension and other benefits provide a strong starting point—but accurately estimating retirement expenses is just as important as estimating income.

People often underestimate costs because:

• They assume spending will drop dramatically

• They misjudge health insurance and medical expenses

• They overlook ongoing housing and lifestyle costs

• They forget inflation and irregular big-ticket items

By taking a closer look at each category—and building a budget that reflects real-world spending—you can approach retirement with greater clarity and fewer surprises.