No one ever thinks they are going to run out of money after they retire, but it happens. Even if most people don’t end up flat broke during the twilight of their life, many retirees often find themselves in a position where they are dealing with monthly expenses that exceed their monthly disbursements.
While Murphy’s Law obviously applies to retirement planning as much as anything, else and it is obviously impossible to anticipate every possible random expense, it is important to anticipate the most common unexpected retirement expenses and not create a plan based on best case scenarios.
You Are Always Going to Need New Stuff
Here is the good news: most people will exceed their life expectancy by a significant amount. The unfortunate downside to a longer life is that despite how much longer you live, every tangible item in your life is still only going to last the same amount of time. Cars break down; eye-glass prescriptions have to be modified, and so on and so forth.
Personally, I can’t think of anything more depressing than staring at a financial statement when I am in the final stages of my life and realizing I am outliving my retirement plan. Realistic anticipation of unexpected expenses is more important than ever.
Someone is Always Going to Need Help
One of the consequences of being financially responsible is that regardless of where you are in your life other people are always going to come to you when they need financial assistance. Relatives, friends, neighbors; as soon as people find out that you are a disciplined investor and have a long-term plan they start thinking of you as someone they can look to when they need advice, or, more commonly, when they need to borrow money.
Rising Costs Are Always Chipping Away At Your Foundation
Inflation is the number one enemy of every retiree. Rising costs would not be so much of an issue if it was not for the first two items on the list because most retirees have at least a few package options that are experiencing enough growth to keep up with inflation. However, once you start dipping into accounts to pay for your grandkids braces or replace the hot water heater of your house, the impact of inflation becomes more pronounced.