Preparing for the Unexpected in Retirement

Retirement planning means sound investing, smart strategies, and detailed organization. You need to think about the kind of lifestyle you want and create a budget and an income strategy that helps you achieve it. 

However, you don’t just need to plan for expected expenses like food, shelter, transportation, entertainment and travel. No, you also need to plan for the unexpected. 

When you retire, you must find a way to live for 20 or 30 years (or more) without earning an income from working. Think about all the things that can happen in 20 or 30 years. Life in 20 years will likely be very different than it is today, and you won’t know what it will be like until it happens.

So, you need to prepare for the unexpected.

Emergency Planning Tips

Emergencies occur in life. Sometimes they come in the form of a burst pipe in your basement. Sometimes they’re a stock market crash. Sometimes, unfortunately, they’re an unforeseen accident. This is why it’s so crucial to have an emergency fund. It can help you get through the unexpected. 

Major expenses are going to occur during your retirement and there’s a very good chance you won’t be able to predict them. This is why you’ll want to keep building your emergency fund in retirement. 

One of the easiest ways to do this is to operate a separate savings account and automatically deposit a certain amount into this account each month. If you’re not already doing this, it’s a good time to start. 

Budgeting

• Think about how much you spend each month. Having a budget is important, so if you don’t have one, this is a great time to start one. Keep track of your monthly expenses and break them down into two categories: variable and fixed.
• Fixed expenses are the ones you can’t really change, like your rent or mortgage costs, your car payment, your insurance costs, etc. Variable expenses are ones that you have more control over, like your entertainment budget.
• Be sure to include an emergency fund section in your budget. If you find that you don’t have enough at the end of the month to put money aside for emergencies, you’ll want to reduce your variable spending so you have some money left over. 
• It’s also important to diversify your investments to reduce risk. Having everything invested in one area leaves you incredibly vulnerable. A financial advisor or retirement planner can help you in this area.
• Paying off debt is important. If you’re not able to pay off your debts before you retire, you should put significant effort into doing so as soon as you can. The money you spend on debt repayment each month could be better applied to an emergency fund for when the unexpected happens. 

Caregiving

Your health is one of your most important concerns in retirement. If you’re healthy now, hopefully that remains throughout the rest of your life. However, you can’t plan based on hope. As people age, there’s a good chance that they’ll require more medical care. This could mean more money spent on medications or you may end up with health concerns that drastically change how you planned to live and retire. 

You’ll want to have a plan for how you’ll afford these increased costs. Yes, Medicare may cover some of these expenses, but it won’t cover everything. Paying for supplemental insurance can be a good idea.

Aging with Confidence

As you age, your needs will change, but you’ll still want to aim to live the lifestyle you want. This may mean making changes to your home, such as installing grab bars, converting your bathtub into a walk-in shower, or building a ramp or an elevator so you can easily get up your front steps. These additions can make it easier and safer for you to continue living on your own even as your mobility needs change. Of course, all of these modifications have costs. 

When it comes to long-term care, know that there’s a good chance you’ll have to pay at least a portion of these expenses yourself. Government benefits or private insurance may help, but they may not cover everything, and they may not cover the kind of care or lifestyle you want. 

Know That Things Will Change

One of the most important aspects of retirement planning is knowing that things are going to change. Retirement isn’t a “set it and forget it” situation. It’s important to regularly review your financial situation and your goals to make sure your plans are still aligned with your circumstances. By taking a proactive stance to saving and knowing more about the possible expenses that may occur in retireme