Planning for Expenses You Didn't Plan On

Do you like surprises? A retirement party organized by your coworkers — maybe. Needing to replace your HVAC system — not so much. Ideally, planning for unexpected expenses in retirement should begin long before you turn in your notice.

Your Budget in Turmoil

Some things that can disrupt your retirement spending plan are common problems. Home repairs and maintenance, a car that needs work, or higher property taxes can throw your budget off course. But what about events that you never anticipated, such as:

• Unexpected Job Loss. Company downsizing and layoffs could force you to retire earlier than you planned.


• Relocation Costs. You may want to move closer to family or to a specialized facility for medical treatments.


• Health issues. You might have to retire sooner than you planned because of health issues or a disability.


• Death of a spouse. Loss of a spouse’s income could upend your finances.


• Home Renovations. You might have to make upgrades to your home to accommodate a disability.

Create a Retirement Budget

Creating a budget ahead of retirement will provide a snapshot of how much income you’ll have and how much you’ll need for living expenses. Review and adjust your budget periodically.

Your Cash Reserve

An emergency fund should hold enough cash to pay for unanticipated expenses and living costs for a minimum of three to six months. An emergency account is something you should maintain throughout your lifetime and replenish whenever you use any funds.

Create Passive Income

You may be able to generate extra cash by owning rental property. Owning stocks that pay dividends is another way to earn extra income. Favorable capital gains rates make dividend-paying stocks a good choice for extra cash.

Estate Planning

Work with your legal professional to draft a will and name a personal representative to oversee the disposition of your assets. Having an estate plan ensures that your loved ones receive your assets when you die. Proceeds from life insurance can help support a surviving spouse.

Periodic Financial Check-ups

Meet with your financial professional regularly to review your investments and financial plan and ensure your finances are on track and your investments reflect your risk tolerance and goals.