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…

Maybe you’re considering renovating your master bath or kitchen – or doing something simple like changing out the toilets or garage door. There are plenty of reasons to do projects like these but one I hear most often is “to increase resale value.” But does it really do that?

According to the Cost vs. Value 2022 report, below are the national averages for what you can expect to recoup from various home renovation projects…

One of the most difficult parts about sticking to a savings plan is that no month looks the same. It’s easy to budget for fixed expenses like your mortgage, phone bill, and subscriptions. With time, you can estimate some variable expenses like eating out and groceries.

But it is much more difficult to plan for irregular expenses like out-of-pocket health care expenses, replacing an HVAC, a big vacation, or a broken transmission…

“A banker is a fellow who lends you his umbrella when the sun is shining, but wants it back the minute it begins to rain” - Mark Twain 

Individuals in the process of buying a home with financing usually get a “maximum loan amount” from the bank. Some assume this is a reasonable estimate for what they can actually afford… 

You just got done picking out your car and are invited to finish the deal by talking with the “finance guy.” This typically involves sales pitches for extended warranties on everything from your tires to your favorite Beatles CD…okay, that last one might be a stretch but they really do offer protection on just about everything.

Have you ever questioned whether it was in fact worth it? In 2013, Consumer Reports did an extensive survey to find out the answer to that question…