Retirees’ biggest surprise expense

Here are three of the week's top pieces of financial insight, gathered from around the web: 

Retirees’ biggest surprise expense

Home expenses put a bigger dent in retirement savings than even health care costs, said Brenden Rearick in Money. The surprising finding comes courtesy of T. Rowe Price, which surveyed 1,300 American households. According to the results, home expenses, “which the company defined as things like home repairs, mortgages, rent, and taxes, contribute to about 25% of the average retiree’s increase in spending.” Health care–related costs made up only about 5%. “Homeownership gets more expensive with each year, even if your house is fully paid off.” T. Rowe Price notes that what seem like small expenses tend to add up as retirees age, with increasing spending on “housekeeping, laundry, household furnishing, and cleaning.”

A pandemic-era magnet for fraud

The IRS is pausing processing for a pandemic-era tax break that has been a major fraud target, said Richard Rubin and Ruth Simon in The Wall Street Journal. The employee retention credit was created in 2020 “to reward businesses and nonprofits for keeping employees on payrolls” amid pandemic shutdowns. Though the active credit expired in 2021, “the window to claim it retroactively by filing amended tax returns is open until 2025.” The agency says a “pop-up industry” of firms that promote the credit to small businesses — for a sizable commission — doesn’t do enough to scrutinize clients’ eligibility. One company, Bottom Line Concepts, has recruited “a vast sales army” of affiliates, including an anti-aging consultant in Florida and a telemarketer in Pakistan, who cold-call businesses offering to help them claim their credits.

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Beware of excessive HOA penalties

The power of homeowners associations often goes unchecked, said Sarah Holder in Bloomberg. About 74 million people in the U.S. live in community associations, mostly HOAs, which “create their own regulations, meant to keep behavior polite, aesthetics consistent, and property values high.” But the rules can be “capricious” and penalties for violations steep. In about 20 states, HOAs are allowed to file so-called super liens, which “can get priority over other liens or loans on the property, including a first mortgage.” One Colorado couple, Jose and Lupita Mendoza, say that a series of minor violations, like failing to remove a dead tree, snowballed into the HOA’s foreclosing on their home — despite their never missing a mortgage payment. 

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