10 Unexpected Retirement Costs to Think About

Written by Stephanie Lynch

Even if you think you’re the most prepared retiree on the planet, there will still be those pesky unexpected costs that add up over time and may put a burden on your budget.

According to the AARP, retirees fear outliving their savings more than they do death.  Since you don’t want to be this statistic, here are 10 unexpected costs you may have never thought of and may want to prepare for just in case it does happen:

1. Divorce

Even if you feel you’re happily married, you do realize you’re going to be with your spouse a lot more often than you were before.  This could be a good thing, or it could be a disaster waiting to happen.

If you think about it, you probably worked a 9-5 job, leaving you with very little time to spend quality time with your loved one.  While less than 3% of retirees divorce, it’s a situation that could eat up a lot of your assets, especially if you don’t have a prenup.

2. Fraud

Fraud is rampant on the Internet, and if you use it to purchase items, complete bank transactions or send money to friends, you may want to think about the chances of a hacker and/or virus attacking your computer.  Sure, while banks are pretty good at spotting scams and preventing you from sending cash, they can’t do much if you send your money overseas to someone who swindled you.  While the chances are slim, scams have cost some retirees tens of thousands of dollars.  Remember fraud happens outside of the Internet as well, so it’s always best to do your due diligence before sending your money to any organization.

3. Poor Investments

Whether it’s trusting the wrong person or making the wrong investment decision, you’re going to want to take a close look at where your money is invested.  Do you have your money invested in bonds?  CDs? Or is it a tech company that started up yesterday?  While it’s okay to risk your money in your 20s, it isn’t okay to roll the investment dice when you are on the brink of 70 or 80.  Poor investments could easily cost you 10 to 30% of your nest egg.

4. Death of a spouse

This is a sad one, but it can easily happen to anyone in retirement.  Whether your spouse was working a part-time job, had a pension or any sort of other income, you can count on this being affected if your spouse were to pass away.  With this, however, it can be avoided ahead of time if you prepare for this worst case scenario.  For example, if your spouse were to have a pension, what portion would you get?  What about social security?  How would that change?  Be sure to know this so you know how your budget is going to change.

5. Family emergencies

If you have grown kids, what happens if a family emergency were to happen?  Would you be willing to help financially?  For example, let’s say they lost their car because it needed a new engine, and without a new one, they can’t make it to their jobs.  There could be some situations such as these that could potentially cost your budget thousands of dollars.

6. Drop in home value

While we can’t predict the future, what happens if your home is worth 25% less than what it is today?  If you plan on downgrading in the future and taking some of that equity, you may be hurting if your value isn’t what you think it will be worth in the future.

7. Dental expenses

Sure, you will be covered by Medicare and a supplemental insurance if you so choose, but what happens if you don’t have any dental insurance?  The average root canal can cost you a few thousand dollars, while a few cleanings and a new crown can cost close to that figure as well.  We all know our teeth won’t get any better as we age, so it’s best to budget for those unexpected dental bills.

8. Home repairs

As your home ages, it’s going to increase the chances of replacing big name items such as the roof, air conditioner, water heater and if it’s old enough – maybe the plumbing and electrical.  Regardless of how old your home is, you will want to make sure you have a budget set aside to be prepared to pay for a $6,000 new roof or $1,200 water heater.

9. Expect tax changes

We can’t assume the tax code will stay the same forever; in fact, if we look at that past, we can only assume it won’t.  If any of your investments are affected by taxes, what happen if these taxes increased 5, 10 or 20%?  Would it hurt your budget?  For example, qualified dividends aren’t taxed for the first $74,900 if you’re married filing jointly.  What happens if the government wants to tax these dividends like income?

10. Unexpected travel

While you may plan on traveling throughout retirement, you have to think about unexpected travel such as weddings, a funeral or some event that you don’t want to miss.   As you know, an airline ticket, hotel room and rental car can easily cost you $2,000.

Retirement can often last you 30 years or more, and with this long journey will come this unexpected costs.  As long as you make room in your budget for these surprising costs, there’s no reason you have to toss and turn thinking about how the bill will be paid.

Adjusting to Retirement: What to Expect

Written by Andrew Wilson

 When you spend decades preparing for your retirement, it’s easy to think of retirement as little more than a financial undertaking. Save enough money, quit at the right time, live within your means, and everything will be fine, right? But the adjustment to retirement is one of life’s major transitions. After all, you’ve probably defined yourself by the work you do for decades. So when you’re no  longer working outside of the home, it’s easy to feel a bit lost. Here’s what you can expect from your transition.

A Financial Shift

For perhaps the first time in your life, you’re no longer drawing in a paycheck, but you are taking money from your retirement stockpile. That alone is enough to leave you a bit uneasy, so don’t be surprised if you find yourself fixating on finances for a while. You’ll need to find ways to adjust your expenses. Ditch that gym membership you no longer use, and consider cooking more meals at home. Once you’ve fallen into a new financial groove, though, you may be surprised to learn that you really don’t have to deprive yourself if you’ve appropriately planned for your retirement.

Anxiety About Money

When you’re not making money, it’s natural to be anxious about finances. And if you didn’t save enough for retirement, or if you have unexpected expenses, anxiety is almost inevitable. Establish a relationship with a financial advisor you trust early on, then keep working with this person as your situation changes. If your anxiety persists, consider this: seniors have options that younger people do not. If you own your own home and need cash to fund an emergency, home repairs, or some other expense, consider a reverse mortgage. This option offers you tax-free cash that you do not have to repay as long as you remain in your home.

Confusion About What’s Next

In the first weeks of retirement, you might feel positively giddy, totally footloose and fancy-free. But as the realities of life without work set in, you might begin feeling useless, confused, and even depressed. This is normal. Give yourself time to adjust to this significant life development. Take some time to consider how you want to spend your time, then do all those things that working always kept you from—whether it’s starting a garden, starting a nonprofit, or just spending more time with your family.

Increased Family Conflict

You probably envisioned retirement as a chance to spend more time with the people you love the most. But more time together can also mean more conflict, particularly if you’re also struggling with the emotional adjustment to retirement. Don’t be surprised if you find yourself snapping at your spouse more, or if your kids want a break from togetherness. Give it time and be willing to work through it, and you’ll soon find your family relationships adjusting to your retirement.

A Shift Toward Generativity

Generativity is the tendency to look toward future generations and what you can contribute. Shifting toward this mindset marks a major psychological change that can imbue your retirement with meaning and purpose. Rather than focusing on what you can get out of your retirement, you might find yourself eventually considering what you can offer the world, the next generation, and your family. If you are struggling with the retirement adjustment, know that this shift toward generativity may be the most helpful way to settle into your golden years.



Tips to Help Your Transition Into Retirement

When I took the leap to join the ranks of the retired I thought life was going to be a breeze. All of the tough stuff was behind – right? The kids were in general independent and having families of their own. The house was pretty much paid off. I felt confident stress from the job would soon fade to a distant memory. And I had a ton of hobbies and projects I was just itching to get to. How difficult would it be to spend my days doing what I wanted rather than what someone told me to do?

It did not take long to discover the switch from full-time-employee to full-time-retiree is not without its own challenges. I was a novice at the retirement thing, a first timer with no history to look to for guidance. The retirement my parents live is from a different time and although they are very happy the vision I had for my own second act was not the same as theirs. Right off the bat I felt guilty if I did not keep myself occupied every moment. I had learned in the working world never to waste one precious minute lest an important deadline fall into jeopardy. Old habits can be difficult to overcome and I struggled to evolve. Then I faced the dilemma all retirees will one day confront when asked at a party “What do you do?” Without my career to fall back on I was caught off guard. What exactly does the retired Dave do? How should I spend my free time in some worthwhile way?

That was four years ago. Since then I believe I have gotten better at this retirement thing. It takes work but I figure there is no better way to spend my time now if I hope to make the best of the coming decades of retired living. Here are a few thoughts that helped me more smoothly transition into retirement.

Adjust your intensity to fit your new lifestyle. Now that you are retiring, you are free from any stressful job requiring 100 percent of your focus 100 percent of the time. The only deadlines you face are those you set. Your transition can be easier if you calm yourself and learn to find a pace that you are comfortable with. Concentrate on the journey rather than the individual steps. In the initial days of my retirement I often found myself kicking into a higher gear when doing simple things like gardening or cleaning the house. Rather than relax in the moment and enjoy the activity I pushed myself to get it done quickly and efficiently – just like the boss always wanted. But there was no more boss. It took serious effort to recondition myself. I had to realize there is no hurry. Not everything must get done on a schedule. Now I sweep the deck slowly, patiently, enjoying the nearby oak trees and savoring my freedom. It still gets done only at a pace that suits me.

Couple on the beach

Give yourself time and space to get there. Don’t be in a hurry to get somewhere you have never been before.  There are no more deadlines. Realize you answer to no one other than yourself. Don’t pile on unnecessary pressure to immediately achieve. If what you do is pleasing to you it is worthwhile. Cut yourself some slack – you have earned it. You are not the first person to retire and I would venture that few newbies get everything right from day one.

Channel efforts toward what you can control. No one can entirely control what life might throw our way. That does not mean we cannot influence our future. Retirement is the right time to focus on what is good for you. You finally have time for you. You finally have time to figure out an exercise regimen that you can stick with for your good health. You have time to work on that diet to make you fit not fat. You have time to explore the multitude of activities to engage your mind and heart and passion. Rather than focus on what you cannot do try to imagine what you can – and go for it.

Don’t hide what you are feeling. This is a new chapter in your life. You should not expect it to proceed flawlessly. There will be frustrating moments to cope with. But you are not alone. It is not healthy to hide or try to ignore feelings that cause you concern. Remember giving advice to a child or friend encouraging them to share what distressed them? Talking about it can help. That was good advice – good enough to follow yourself. Facing difficulties alone can feel overwhelming especially for those retired. We no longer have co-workers to lean on, children are out in the world living their own lives, everyone always seems to be so busy. It is often up to each of us to take the initiative to open up and begin the healing process.

Don’t put all your eggs in one basket when it comes to keeping busy.  With decades of retirement life ahead, one hobby or golfing every day is not going to make it. Variety is the spice of life even more so in retirement. The more options you have to entertain and engage you the less likely you are to become bored. Rather than bored we hope to find ourselves excited about what the new day has to offer. Don’t be afraid to try something – anything – to stir things up. What do you have to lose?

Being retired should be fun so don’t wait too long to dig in. Take advantage of the fact you will never be younger than you are today. Do those things now that down the road may become too demanding. Cut yourself some slack but don’t allow yourself to watch life from the sidelines. As long as you are healthy enough to get out there and play, join the game and enjoy. That’s what retirement is all about.