Most pre-retirees I meet with for the first time have a fairly good estimate of the regular monthly expenses. However, the area that is hard to predict and plan for is the unexpected costs. One exercise that I like to do that brings clarity to this is to review actual expenses for the past few years. We often find that irregular expenses are the culprits – helping a daughter with her car, an HVAC replacement, or a dental procedure.

It can be tempting to assume that these expenses will mostly vanish in retirement, but they don’t. These one-off financial obligations can put a significant dent in your retirement savings if you're not well-prepared. While there can be a lot of surprise expenses, I found that they typically fall into four key areas…