Think back to when you were a young child: Where did you think you'd be at the age you are today? Did your vision of "future you" match up perfectly to who you are now? Life is full of surprises — and while that may seem like a bit of an understatement, many people don't consider what could lie ahead.
When preparing for retirement, it may be worthwhile to develop plans to handle these surprises. Planning for unexpected health care costs in retirement is essential, but it's equally important to think about other expenses that could affect your finances.
When you're employed, such financial setbacks are inconvenient. But when you're retired, they could have a significant effect on your financial stability. Explore the following unexpected retirement costs and learn how you could handle them to put yourself in the best possible position in your golden years.
Financial Assistance for Loved Ones
No one else will fund your retirement — but you know this. This responsibility falls on you alone, which is why some financial planners advise parents to not jeopardize their retirement or aid grown children or grandchildren, according to CNBC.
The reality is that emergencies do arise, and many parents or grandparents feel the need to offer financial support to their loved ones. This assistance could range from giving a small loan to your granddaughter to help her fix her car to allowing your grown son to move back into your home after a divorce.
Having a financial cushion in retirement could help you handle these expenses, but what if that is not an option? You might think about the assistance like a business deal — one where you can offer aid and still maintain your retirement finances. Sit down with your loved one and discuss what support is needed and develop a plan for repayment or aid that won't impact your retirement savings.
The Big Move — Again
Do you plan to stay in your current home for the rest of your golden years? You may choose to move or downsize when you retire, which could potentially help you stretch your retirement savings. But have you also considered the cost of moving?
Moving expenses can be high, even if you choose to buy or rent a relatively inexpensive home. From hiring movers and renting a truck to buying boxes and paying someone to haul away large items you cannot (or don't want to) take to your new home, there are many things to consider.
Even if you have put aside funds to pay for your move, do you have enough put aside for a second (or even a third) move? You may want or need to move again someday — whether into a new home to be closer to loved ones or into an assisted living facility or nursing home due to health concerns. Long-term thinking and saving could help you prepare for these unexpected costs.
Inflation in Your Golden Years
Don't let rising costs in retirement blindside you. Over the past decade, the average rate of inflation has hovered around 2 percent, according to the Bureau of Labor Statistics. And costs for everything, from food and gasoline to clothing and more, will likely rise by the time you finally retire.
Consider inflation when setting your retirement savings goals, which could help you prepare for these rising costs — which often catch many retirees by surprise.
Do you plan to use investments to pay for some (or all) of your retirement? If so, it could be time to review your options. Even if you are financially savvy, and have earned a considerable amount of money in the stock market, investing always comes with the risk of loss.
Stocks could be a smart move for retirees, especially those who are concerned about outliving their finances. However, choosing to diversify your investments among certificates of deposit (CDs), bonds and other low-growth investments could help you minimize risk.
No one expects to have his or her car stolen, home invaded or pocket picked. Such an event can be devastating both psychologically and financially — especially for retirees living on a fixed income. Therefore, it could be a smart move to budget for insurance costs when preparing for retirement.
But you might also be wise to protect yourself and your decision-making too. Scammers routinely target retirees with everything from "too good to be true" investment schemes to unneeded (and unauthorized) computer "repairs." As you age, it could be helpful to share your investments and payment decisions with a trusted and financially savvy friend, relative or adviser.
Family Milestones & Celebrations
While you may be prepared for inflation or unexpected health care expenses, are you also ready for the costs associated with attending your youngest grandchild's destination wedding in Bali? You see, not all unexpected costs are unfortunate.
Family milestones and celebrations are a vital part of life, and setting aside a portion of your retirement savings for related costs could help ensure that you're there for life's most important — and sometimes unpredictable — moments, such as graduations, weddings, baptisms and more.
When preparing for retirement, you may think you'll economize. But that's not always easy when you need to travel to visit children, grandchildren — or possibly great-grandchildren. You might budget for such expenses just as you do for food, housing and other necessities.
Retirement is an exciting time in most people's lives. But when preparing for the joys that retirement brings, consider planning for the unexpected as well. Having plans in place to handle these surprises will help you stay on track and give you peace of mind for the future — no matter what lies ahead.