Unexpected expenses after ER

[David1961]

What has been your biggest "unexpected" expense since ER? Either something that you just did not see coming or something you thought could wait for a few years. How did this affect your budget or plan for the year? Feel free to list more than one expense if you'd like.

 

[Dash man]

My MIL his headed into memory care shortly, and my FIL and his wife, (DW's step mother) need to be in assisted living. They have each been fighting it, but their care is taking a big toll on the family. We're the only ones with the resources to pay for decent care for the three of them, so it'll be hitting us this year. We'll have to cover any expenses their SS doesn't cover. Selling the FIL's home is a touchy subject since his 87 yo wife doesn't want to leave it yet, but it's too isolated for them to stay there. Fortunately we can handle it, but it does make us need to watch the other spending more closely.
We had always felt they could move in with us when they couldn't live alone any more, but they have gotten so demanding it wouldn't work.

 

[FUEGO]

I'm only 1.5 years into ER and so far zero unexpected expenses. We just paid $8,700 for new siding, new windows and a major roof repair. That amount is budgeted in a ~$1,500/yr capital replacement budget line item. We knew we needed these new items when we bought the house 11 years ago, and finally decided we could "afford" it.

Our investments are doing well enough that I contracted out all the work instead of trying to DIY any of it (which could have shaved off $1000-2000).

Looking ahead, I could see changes in the ACA or tax law changes resulting in unbudgeted and somewhat unexpected expenses. We also have a question mark next to braces for the 3 kids. Maybe they will need it, maybe insurance will pay for part or all.

 

[athena53]

Taxes. I figured we'd get a giant refund this year since I left my job last May and had zero wage income after that. Nope. I've put in estimates of our capital gains, etc. from the brokerage statements but am waiting now till the downloads are available before I know the real numbers. Looks like we're going to owe $2K to the Feds alone. The investment results for 2014 are good news, but still it feels like bad news.


Then there's 2015. I'm planning to do a Roth conversion to fill up the 15% bracket but that means we'll owe $10K in taxes. Better start making estimated payments. :-(

 

[Meadbh]

So far, there haven't been any. Touch wood!

 

[ArkTinkerer]

Scheduled (and announced!) I will RE this year. Now facing legal bills from someone demanding a road thru the family farm. Thought we had settled this years ago.
If we get off for $10K I'll be surprised.

 

[razztazz]

$16,000 for relative's medical bills.

 

[Hermit]

What has been your biggest "unexpected" expense since ER? Either something that you just did not see coming or something you thought could wait for a few years. How did this affect your budget or plan for the year? Feel free to list more than one expense if you'd like.

Two events happened just as I was retiring (July 2013):

Event 1: I was finalizing costs for a kit home and told the company I would not go past the initial plans without a complete estimate. The estimate went from the approximately $150,000 we had been working with to $275,000. That was so outrageous I told them I couldn't work with them. The initial plans cost me $2500, but that was money under the bridge. I have worked with an architect to develop plans that I like better than the kit home and am proceeding with construction. I don't know what the final cost will be, but I think it will be less than $275,000.

Event 2: DS told me he was not going to graduate on time. That was an additional $30,000 last year and I have committed to another $14,000 this year. I am moving him to finishing up with some low-interest loans. Having the kids finish college without debt was a very strong desire of my late DW. I am working on balancing this commitment with being reasonable with him about finishing in a timely manner. Not easy.

I moved a pile of 401k money from bonds into a Stable Value fund to cover contingencies if needed. I am also withdrawing cash from 401k to bump my income to keep me under income constraints. Last year the income limit was $76,000 for Savings Bonds used for education, this year it will be $84,000 for Medicare. (Yesterday was my first day on Medicare.)

Another area I underestimated by a large amount was medical. I estimated $9000 per year including the two kids until Medicare. Last year I spent over $17,000 on medical. Most of the cost was corp. retiree medical plan. Both kids have been moved to their own insurance which I am helping to cover plus my Medicare costs. I am estimating $6000 for 2015.

 

[seraphim]

We paid off our son's KIA ($10k) so he can start a job without being in debt. Also peddled away $3k more in travel expenses and fun stuff than I'd planned, and a new camera when the old one got dunked. It needed replacing anyway. Not a big deal for us. Don't want to do all that every year, though lol...


Sent from my iPad using Early Retirement Forum

 

[jim584672]

Thinking of the Game of Life, "uncle leaves you skunk farm, pay $7,000".

 

[Tailgate]

+1 on Fed taxes..just estimated mine and will owe about $1,200...thought I had that covered.

 

[Sue J]

When DH retired we had some home expenses that we planned to take care of in the first few years and we had the money set aside in savings to cover them - new windows, new roof and new HVAC system. It came to about $24,000 and we took care of all of those in the first 2 years.

The biggest "surprise" came in the way of health insurance expenses and medical expenses. When DH retired he had 3 levels of choices for his retiree health insurance. For 2013 his pension system had only one option, the most expensive plan. The lack of options increased our monthly health insurance costs by $400/mo ($4800/yr). By 2014 the increase was $450/mo so we switched to an ACA plan with a nice subsidy. We chose a HDHP with and HSA. But then I needed a hip replacement and we flew through our high deductible.

Life happens and we are both turning 60 soon. While we have an emergency fund and live on less than the pension and save every month toward "the unexpected", you just can't predict what's going to come next.

 

[jabbahop]

expensive tractor repairs/maintenance. We need it to plow/maintain our long, steep driveway and I am not a good enough mechanic.

 

[Independent]

My former employer cancelled retiree health insurance while my wife was doing chemo treatments.

I had expected them to slowly grade off their contribution to retiree benefits, this was much more dramatic. There was a little bit of "grading" in their actual practice ("cancel" is a little strong) but it cost us at least $50,000. Of course, this was before we could buy guaranteed-issue exchange policies.

We had more than one close relative who was hit by a combination of unusual health problems and unemployment after 2008. We provided way more support than I ever expected.

 

[braumeister]

A profligate BIL with grand delusions and a tenderhearted DW who wants to help him out despite his history.

We're dealing pretty well with the situation, but it was unexpected.

 

[Cobra9777]

We had a water leak upstairs while we were away that ultimately added up to $24K in repairs. Insurance covered everything except our deductible, so it was not a huge deal budget-wise. However, we took advantage of the opportunity to do several upgrades and remodels. So for example, insurance paid to replace X square-feet of carpet, but we replaced with wood floors. They paid to repair water damage to a bathroom vanity, but we replaced it entirely. The list goes on and on. It's been a hassle, but in the end, these were all changes we were planning to make anyway, and most will increase the value of the home when we eventually downsize. So, the fact that insurance paid for a portion of all the upgrades was nice. The unexpected hit to the budget for the deductible plus the upgrades has been around $12K, and that could go higher.

 

[LinCella]

TAXES! I thought I had enough taken out from my lump sum distribution but no such luck.

 

[freebird5825]

I FIREd in 2007. Mr B retired in 2009.

Mr B and I both had to replace our vehicles, one in 2012 and one in 2014.
We split the cost of each used vehicle. I cashed in some EE bonds for my vehicle, and he financed his with a very low interest car loan. We have each repaid each other for the half of the cost of each vehicle.

Other than a recent repair to my used vehicle, nothing we could not handle through immediate cash flow.

Knock on wood !

 

[Rustic23]

For the first four or five years of retirement we spent about $5,000 a year on 'project/things' I never knew we needed or wanted. Honda Scooters, and a bulkhead for the lake, Golf Cart (we don't golf), Bug spray system. It just seemed like there was always something. That has tapered off the last couple of years. Well maybe replaced by cruises

As most of those were self induced, I can't say any were 'unexpected'.

 

[Ticker]

Unexpected grand babies!! I budgeted for every other possible contingency,
but failed to budget money for the trips to see them, and the supplies we need to
have around the house for them. I would have worked a little longer if we
had gotten a heads up, but right after I gave notice, both kids turned up pregnant!

I think this is somewhat better than spending money on the house or relatives....

 

[Nodak]

$16,000 medical expense before Medicare kicked in.

 

[W2R]

What has been your biggest "unexpected" expense since ER? Either something that you just did not see coming or something you thought could wait for a few years. How did this affect your budget or plan for the year? Feel free to list more than one expense if you'd like.

Although they haven't been major, my medical expenses have sure been a lot more than they were before I retired. For example I didn't expect my prescriptions would be almost three times as expensive after just five years. And then, I never expected that I would be paying for a dental implant instead of a bridge - - but to me it was SO worth the cost.

This hasn't presented a problem for me, I guess because I had a lot of slop in the budget.

 

[kaydedid]

Not quite retired yet, but we were 2-3 years from ER. Got pregnant (planned), baby has major birth defect (spina bifida). Thankfully, there are a lot of medical interventions for this disability, but they're expensive - a minimum of 4-5 neurosurgeries from birth til age 18, extensive physical therapy, seeing 4-6 different specialists 2-4x a year, medical supplies for daily catheterizing etc.

Currently our out-of-pocket max is capped at 6k/year, but it's gone up 2k in the past 2 years, so I expect it to continue to rise, and we'll likely hit this amount every year. In addition, one of us has to stay home with the little one, since no local daycares will do catheters (and he'll need one every 4-5 hours). ER is off the radar screen for now, but I am so glad we got on the path and cut our expenses way down, paid off a good chunk of the mortgage on our cheap house, learned to cook etc. Otherwise, we'd be in much tighter financial straits.

 

[Sojourning]

I'm more familiar with living in countries other than the country in which your income is derived. That means you always have to be aware of the potential affect of exchange rates.

For example, a grea many Brits who retired to Spain and then saw their income in UK pounds sterling drastically affected by the exchange rate with the Euro have been moving back to the UK because they could no longer afford their 'villa with a pool' in Spain. Most of them got into trouble because they were living on or near 100% of their income and had no 'cushion' of income to absord any major fluctuations in currency exchange rates. They went from comfortable to poor in a relatively short time.

Another example is the exchange rate of the UK pound to the Canadian dollar. My wife's employee pension got her $2 CAD per pound when we moved to Canada 8 years ago. It has been down as low as $1.58 and only recently started moving back up. So she saw a reduction of almost 25%. Fortunately, it is an index linked pension and that made up for it each year to some extent. It's a bit frustrating though when you get a 'raise' in your pension and all it does more or less is keeps your 'local' income at the same level.

We are also fortunate in that I have Canadian generated income, our entire income is therefore not affected by exchange rates. But mine was when I lived in other countries.

My point then is that if someone plans to move to another country after retirement, they need to realize that exchange rates is something they are always going to have to deal with and plan for. You can't control it so I would not plan on living on more than 75% of your income at most initially.

Another factor that can affect early retirees who leave their home country is the impact on government pensions. I don't know about the US but in Canada for example, the government OAS (Old Age Security) pension is based on years of living in Canada after age 18. To get the full pension you must have 40 years of residence. Someone retiring at 50 and moving to say Costa Rica(example only) will not get a full pension when they reach age 65 as they could only have a maximum of 32 years residence after age 18 if they moved at age 50. That comes as a big surprise to some people who have never looked into the consequences of leaving the country.

The UK is similar in needing a certain number of years of contributions to qualify for a full government pension.

Health care is another factor when considering retiring in another country. In the US you are used to paying through the nose for healthcare. In the UK, it's free and in Canada it's next to free. A family living in British Columbia gets full health coverage for $130 (2 people) $144(3 or more) CAD per month. Someone retiring to another country needs to take that into account. I've seen retirees complaining bitterly about how much healthcare is costing them as if they didn't know beforehand what it was going to cost.

 

[Amethyst]

Excellent insights! When we lived in the UK, our dollars were worth only 50 pence on the local economy - even when using credit cards that charged little or no foreign exchange fee. I'll observe that many U.S. Government employees spend virtually their entire working lives in other countries. Federal pension benefits, at least, do not depend on residency.

Amethyst

I'm more familiar with living in countries other than the country in which your income is derived. That means you always have to be aware of the potential affect of exchange rates.

For example, a grea many Brits who retired to Spain and then saw their income in UK pounds sterling drastically affected by the exchange rate with the Euro have been moving back to the UK because they could no longer afford their 'villa with a pool' in Spain. Most of them got into trouble because they were living on or near 100% of their income and had no 'cushion' of income to absord any major fluctuations in currency exchange rates. They went from comfortable to poor in a relatively short time.

Another example is the exchange rate of the UK pound to the Canadian dollar. My wife's employee pension got her $2 CAD per pound when we moved to Canada 8 years ago. It has been down as low as $1.58 and only recently started moving back up. So she saw a reduction of almost 25%. Fortunately, it is an index linked pension and that made up for it each year to some extent. It's a bit frustrating though when you get a 'raise' in your pension and all it does more or less is keeps your 'local' income at the same level.

We are also fortunate in that I have Canadian generated income, our entire income is therefore not affected by exchange rates. But mine was when I lived in other countries.

My point then is that if someone plans to move to another country after retirement, they need to realize that exchange rates is something they are always going to have to deal with and plan for. You can't control it so I would not plan on living on more than 75% of your income at most initially.

Another factor that can affect early retirees who leave their home country is the impact on government pensions. I don't know about the US but in Canada for example, the government OAS (Old Age Security) pension is based on years of living in Canada after age 18. To get the full pension you must have 40 years of residence. Someone retiring at 50 and moving to say Costa Rica(example only) will not get a full pension when they reach age 65 as they could only have a maximum of 32 years residence after age 18 if they moved at age 50. That comes as a big surprise to some people who have never looked into the consequences of leaving the country.

The UK is similar in needing a certain number of years of contributions to qualify for a full government pension.

Health care is another factor when considering retiring in another country. In the US you are used to paying through the nose for healthcare. In the UK, it's free and in Canada it's next to free. A family living in British Columbia gets full health coverage for $130 (2 people) $144(3 or more) CAD per month. Someone retiring to another country needs to take that into account. I've seen retirees complaining bitterly about how much healthcare is costing them as if they didn't know beforehand what it was going to cost.