5 unforeseen expenses that ruin retirement

[rescueme]

Based upon a post I saw a few weeks ago concering a person who just retired and was going to take a loan to improve their home and the fact that DW/I have a disabled (adult) child to plan for in our retirement, I thought this article touched upon some items that many may know about, but fail to plan for:

5 expenses that derail retirement budget | Bankrate.com

As the old saying goes, "those who fail to plan - plan to fail".

Are all your real/possible "challanges" part of your plan?

 

[obgyn65]

I have a pretty good idea of my annual spending, which makes ER planning easier. The biggest challenge in my case is to determine interest and inflation rates over a 48-year period (I plan to ER at 47, my spreadsheet ends at 95).

Are all your real/possible "challanges" part of your plan?

 

[donheff]

I'm as space headed as they come but I can't imagine any of those five things being a surprise. If you are not taking those matters into account you probably don't have much of a plan.

 

[Nords]

I'm as space headed as they come but I can't imagine any of those five things being a surprise. If you are not taking those matters into account you probably don't have much of a plan.

... and if the plan can be derailed by any one of those factors then it probably didn't have enough of a margin of safety built into it.

I guess starting a family after ER is a decision fraught with uncertainty. I think starting a family is probably a good decision in almost any circumstances, but this sort of situation might require an ER to be ready to face the prospect of at least a semi-ER.

 

[nun]

I'm all set:

single;
no kids;
mum has her own money and plans for care;
hobby is bike riding....can be expensive but I have 5 bikes and don't need more;
major house repairs recently done.

 

[BigNick]

Bailing out an adult child and caring for a parent should definitely already be factored in, as a function of one's circumstances. (Caring for a parent will segue nicely into caring for ourselves, for many people.)

The special needs child issue is unlikely to affect most FIRErs, mostly because if you've got a special needs child, you'd probably already noticed that they come with expenses. But everyone who is hoping to become a grandparent should probably factor that risk in as well - I can't imagine not helping out my kids financially if they were in that situation and asked for it.

The other two - deciding that you "need" a spa, or a yacht - just seem stupid. Of course you budget for home maintenance, but you can't plan for spontaneous outbursts of lifestyle choice.

 

[flyfishnevada]

Adult kids, special needs kids? Kids in general are tough to afford in retirement. Every time I turn around they need something. School clothes, cleats, glasses, basket ball shoes, food money, etc.

Still, those aren't unforeseen. Unforeseen is getting some horrible disease, a natural disaster, etc. Nobody (OK almost never) suddenly ends up with a special needs child on their doors step, accidentally buys a bigger home, or takes up yacht racing. Those things are usually already known (you have a special needs child already), can be avoided (expensive hobbies and up-sizing the home, "Mom, go buy some LTC insurance!"), or you can say no (deadbeat kid).

 

[donheff]

I'm all set:


hobby is bike riding....can be expensive but I have 5 bikes and don't need more;

Your planning doesn't account for the dreaded N+1 syndrome we bike riders are prone too. We suddenly, uncontrollably realize we need one more.

 

[haha]

I have seen people put themselves behind the 8-ball big time by bailing out children. One woman I know pretty much borrowed out her house between 1995 and 2005, up to an amount that it amazes me the lenders would go, to pay off various of her daughter's bills, or to stake her daughter and one or another of several flakey boyfriends to flakey business ideas.

So my friend is likely in her late 60s, still slaving away. If she ever gets sick or her boss decides he needs a younger office manager she is toast.

She is underwater on a very nice house that she never could have bought herself, but got in a divorce settlement. A short period of unemployment would put her in default.

Ha

 

[rescueme]

Nobody (OK almost never) suddenly ends up with a special needs child on their door step...

It happens.

Our son was not properly diagnosed until after his 24th birthday. BTW, that was after he received his BS/CIS, but was unable to hold a job in his field of study. I/DW were age 46 at this time and well into our retirement planning (without this "unknown risk" that later would be part of our plan).

While most special-needs cases are known (but not necessarily well understood) at an earlier age, not all are and expenses related to support of such an indivudial does change during their lifetime. Assuming you are willing to ensure their safety, it may require increasing expenses that do increase as they (and you) age, and must be part of your retirement planning.

I'm not about to discuss our specific situation on a public board, but sh** happens and may impact your retirement if not planned for in such a case.

May you never have to face the challange...

 

[yakers]

Your planning doesn't account for the dreaded N+1 syndrome we bike riders are prone too. We suddenly, uncontrollably realize we need one more.

Thought that only applied to kayaks, yakers has 4 now and always lusting after another one.

 

[Walt34]

We have seen that happen and that will inevitably happen to others we know. One, now 83, had a paid for $400k house and now lives in a subsidized apartment on her $900/month SS check.

We can see the financial train wrecks coming with several family members. The retirement plans of one SIL and her hubby, now in their mid 50's, are at least entertaining since they haven't saved a nickel and their house is only half paid off. They're in for a rude awakening unless they have a few million stashed away that we don't know about.

The wild card for us is the FIL who can't/won't acknowledge that he cannot afford to keep doing what he's been doing. When he can't go any further he will have three options: Move in with us to a basement room that can be made into an apartment, move in with the other semi-sensible SIL and her hubby, or find an affordable continuous-care facility. The last could have been done five years ago and DW and I expended a great deal of effort to fix up the house for sale, then he decided he "can't move". Well, okay, but don't come whining to us when it's too late.

There is no way we can pay for his nursing home care. No one's going to be there for us in 25 or 30 years.

 

[flyfishnevada]

Your planning doesn't account for the dreaded N+1 syndrome we bike riders are prone too. We suddenly, uncontrollably realize we need one more.

That is all hobbies, I think. I have my eye on a new telescope, fly rod and lots of parts for my Jeep.

I have seen people put themselves behind the 8-ball big time by bailing out children. One woman I know pretty much borrowed out her house between 1995 and 2005, up to an amount that it amazes me the lenders would go, to pay off various of her daughter's bills, or to stake her daughter and one or another of several flakey boyfriends to flakey business ideas.

So my friend is likely in her late 60s, still slaving away. If she ever gets sick or her boss decides he needs a younger office manager she is toast.

She is underwater on a very nice house that she never could have bought herself, but got in a divorce settlement. A short period of unemployment would put her in default.

Ha

We've been preparing our kids for our big "NO" pretty much their whole lives. A little here and there, sure, but big time bailouts, no way. DW's aunt and uncle bailed out DW's cousin her whole life. Now she feels like it's owed to her. She in ungrateful and dependent and she has done little, if anything, to improve herself other than marry a desperate, older rich guy. Now they are angry and resentful. Bailing the kids out is a losing proposition all around in most cases.

As far as the housing, I knew a guy that bought a new and bigger house every few years at his wife's insistence. He'd sink a bunch of money into the new place for elaborate landscaping, interior decorating, etc. then she'd demand they sell and buy a bigger house. He did this month before his scheduled "retirement". He took another full time job to pay the bigger mortgage and to my knowledge is still working in his 60's with a fantastic pension to pay for the houses.

It happens.

Our son was not properly diagnosed until after his 24th birthday. BTW, that was after he received his BS/CIS, but was unable to hold a job in his field of study. I/DW were age 46 at this time and well into our retirement planning (without this "unknown risk" that later would be part of our plan).

Yep that's why I added the "almost never". You're is probably rare, but a debilitating disease, car accident, etc. can cause this too. Still, that's not something that happens often enough to justify planning for it to any great extent.

 

[Ronstar]

1. Hobbies - just bought a new bike, so Im covered there. I do want a band saw and other woodworking stuff. May also build my own row boat. Plus I'm picking up new hobbies. Overall I see hobby expenses as a problem.

2. Upgrading home - I am planning to rip out all tile and almost all carpet upstairs and replace with hardwood. Probably need a new roof within 5-7 years. This category could be a problem, but I have numbers for these items plugged into my plan.

3. Bailing out adult children - not a problem since we have no kids.

4. Caring for a parent - probably not a problem since MIL is in better shape than we are.

5. Caring for special needs child - not a problem since we have no kids.

It's good to know that my hobby expenses have the best chance to ruin my retirement.

 

[MichaelB]

Nobody (OK almost never) suddenly ends up with a special needs child on their doors step,

It happens.

Our son was not properly diagnosed until after his 24th birthday. BTW, that was after he received his BS/CIS, but was unable to hold a job in his field of study. I/DW were age 46 at this time and well into our retirement planning (without this "unknown risk" that later would be part of our plan).

While most special-needs cases are known (but not necessarily well understood) at an earlier age, not all are and expenses related to support of such an indivudial does change during their lifetime. Assuming you are willing to ensure their safety, it may require increasing expenses that do increase as they (and you) age, and must be part of your retirement planning.

I'm not about to discuss our specific situation on a public board, but sh** happens and may impact your retirement if not planned for in such a case.

May you never have to face the challange...

This has happened to us also. My older brother suffers from mental illness that was diagnosed ten years ago, around the time he stopped working. Since then he has lived with Mom and we (Mom, some of the siblings) have provided his support. Soon Mom’s house won’t be an option for him and we (even fewer siblings) are actively involved in understanding and finding suitable options.

If we were to assume full responsibility for him it could be a financial issue and definitely would be a lifestyle problem. There are options that are less desirable but still acceptable. The real impact is not financial but time. Understanding what is going on, what options exist, how to access them, and then making that happen is a full time enterprise.

DW and I never assumed everything would be roses or even smooth in retirement and have already enjoyed some great moments. You can't plan for everything. I say when you have an opportunity you take it, so if something unfortunate does happen down the road at least you will have some good memories along with the regrets.

 

[Chuckanut]

I already have a plan for bailing out my children if they need it: They get 6 months of free room and board from dad.

 

[Alan]

Unfortunately my brother is coping with a special needs child. A few years ago his son (eldest of 3) was involved in a serious road accident that left him with serious head injuries, 3 months in a coma, and now can't hold down a job because he has no short term memory to learn even the simplest of tasks. In the aftermath of the whole protracted process his wife left him and so my brother now has his special needs son and his 2 grandchildren to support.

Difficult to plan for such things. Fortunately my brother is one of the most optimistic, upbeat guys I know, and says he loves his job and never had any plans to retire anyway. (he will be 54 in November).

 

[Gatordoc50]

I'll add one. Taking care of a special needs sibling. This can be unforeseen. Especially if your parents didn't adequately plan.

 

[Beryl]

No kids here and my parents were pretty well set. However...

I may have help widowed Mom who is being fleeced by my older sister & BIL. I stopped bailing them out 4 years ago. They still beg like clockwork every 6 months but the 'NO' is easier now that I've FIREd. They lost most of their money with get-rich-quick schemes and adult children. They now have to rebuild retirement with permanent disability checks and hope SS will sustain them.

 

[unclemick]

Hmmm - a couple of little minor ones I didn't have written down. 1) Brought Mom down 5 yrs after Dad died cause she couldn't afford the old Victorian in Washington State, 1993. Feed her cheap stuff and made sure she only drank Gallo white wine LA style. Just kidding.

House and contents went in Katrina, 2005 - minmal insurance because 'over water'.

Had the House/contents as an expenses item in the budget but not as a 'throw away' items.

But was a born again cheap SOB and agile, mobile and hostile, these are interesting problems to be worked. I mean who wants retirement to be dull?

heh heh heh - Missouri's still at flood stage but I are on a hill, a high hill, with tornado/hail insurance as well. Old habits die hard - watching Irene on the weather channel and have my fingers crossed for those in it's path.

 

[traineeinvestor]

That all of these may or will happen is readily forseeable - it's the timing and amount(s) that are harder to predict.

1. taking up an expensive hobby: planned and budgeted for
2. upgrading the home: we plan to rennovate [-]last year [/-]next year and expect to do a full refurbishment every 10 years or so
3. bailing out an adult child: limited post-education support will be made available if needed for the right things and we can do so without putting ourselves in a hole
4. caring for a parent: we already provide some support to DWs parents and surviving grandparents. My own parents are well able to support themselves financially
5. neither of our children have any special needs. The possibilty of an accident or other adverse event affecting one of our children or any other family member) can't be ruled out

I have included provisions for #1, #2 and #3 in the budget and then added 20% to the total budget to allow for contingencies, bad years and to provide a level of "sleep at night" financial security. #1 and #2 are either wholly or partly discretionary - we can do without them if we need to

 

[One-Zero]

They missed one unforeseen event.
I haven't been on this forum in a long time and stopped by to see what's new on the FIRE front. I'm now the father of 19 month old triplets! After being married over 10yrs, retired from military since 2007 (after 24yrs svc) and pretty well set for a FIRE plan, we not only got pregged, but received successive ultrasounds showing more babies over several weeks - so initial shock went to even higher defcon levels. Wife has multiples on her side of family, but really never thought anything of it since we had long since stopped worrying about having kids.
Anyway - a great paying job, modification of plan, and accepting some realities might allow for a redux FIRE - later than planned.
Original plan derailed but we will incorporate some ER lifestyle where possible...They already have passports and a trip to Guatemala under their belt!
A blessing for sure. However, if we had not prepared for our future FIRE and adhered to the financial principles most of us espouse, this would've crushed us on several fronts.
regards,
1-0

 

[haha]

They missed one unforeseen event.
I haven't been on this forum in a long time and stopped by to see what's new on the FIRE front. I'm now the father of 19 month old triplets! After being married over 10yrs, retired from military since 2007 (after 24yrs svc) and pretty well set for a FIRE plan, we not only got pregged, but received successive ultrasounds showing more babies over several weeks - so initial shock went to even higher defcon levels. Wife has multiples on her side of family, but really never thought anything of it since we had long since stopped worrying about having kids.
Anyway - a great paying job, modification of plan, and accepting some realities might allow for a redux FIRE - later than planned.
Original plan derailed but we will incorporate some ER lifestyle where possible...They already have passports and a trip to Guatemala under their belt!
A blessing for sure. However, if we had not prepared for our future FIRE and adhered to the financial principles most of us espouse, this would've crushed us on several fronts.
regards,
1-0

Great looking happy kids!

Congratulations!

Ha

 

[Moscyn]

There's only 1 out of the 5 expenses which is troubling me now - caring for a parent. My parents are always in denial of being to sick to care for themselves. They have money saved and their own home. They tell us not to worry but being a planner, I have put aside money for them when they need the care. Dad became really sick and has been in and out of hospital for 3 months after having chemotheraphy end of last year. I don't think what he as saved is financially sustainable for the treatment he is receiving and mum does not have the energy to care for him. I am glad I have allocated monies for medical and caring for a parent but with the rising costs and long stretched illness, am wondering whether what I have allocated is sufficient.

 

[ItDontMeanAThing]

[Spoken with a Homer Simpson impersonation:] "Hobbies .... Ohhhhh-hhhh-hhh-hh-h. As expected I'm spending more time with photography then at my peak interest during the film era. I want a big monitor with a color profile that my editing software knows about, a digital SLR with a long fast lens in addition to the usual kit and a workstation that makes the hours that evaporate while I'm editing photos easier on my body.

The sensible route is to learn more about my current equipment before buying more choices I don't understand. Darn my self control.