In past posts I've talked a lot of one off expenses that come along for everyone but which can be especially difficult to plan for in retirement. One specific example I use regularly in a joking fashion is new razors but a more serious one is new tires.
A friend of ours here who is retired found out her SUV needs new tires and got an estimate of $900. She will do a little comparison shopping and either fund a better deal or not but this is a great example of the one off problem. A $900 expense, or something close, is not by itself a deathblow but it is very inconvenient. These sorts of things are never convenient but they come along pretty frequently.
Look back at your Quicken for the last year, what do your one offs add up to? Is that a good number to budget going forward? A reader once commented about budgeting $1000 per month for one offs, is that the right number? What about a $25,000 segregated bucket for one offs? Maybe an empty HELOC is a solution for some folks. There is probably no single answer but it does seem to be a universal problem. Anecdotally it seems that some folks have worse luck with this than other folks and so being self-aware to this dynamic is also important in trying to plan for this.
Many financial plans overlook this issue as do rules of thumb like needing 75% of your pre-retirement income after you retire but it is an obvious and real issue that like retirement itself requires a unique solution.
Of course if you have a set of trax then you don't need to worry about tires. Short post, busy start to the week.
10 comments:
Try buying tractor tires. High commodity prices aint what they seem to be.
Thought you would appreciate this Roger: Pimco's Rob Arnott is going abroad for growth at http://finance.fortune.cnn.com/2012/06/04/pimco-rob-arnott-investing/
thank you RW
Roger,
I think the unexpected expenses are based on what a person has and where he lives and the life style he has. My unexpected expenses are up to 30 thousand dollars and counting. My life style has been reduced. Italy is great but when it comes to kids the social services overeact to the point of breaking up a family for no reason. Like to ask you Roger if in the future I can expose the case. This is the only way I can fight back by exposing the italian private school on the internet. Now i have no choise but to stay in the us.
jeff from nyc
My ex-wife always used to say "why save, you might be dead by the time you need it"! Notice I said ex-.
Unexpected "one off" expenses come up frequently and more often than not. Just spent $1000 on my wife's 19 year old cat; came home to find wife's computer dead (estimate of $200 to work on power supply) and of course all the unanticipated medical expenses not covered by insurance...
It varies a LOT from year to year from a couple thousand dollars to well into five figures.....
Hopefully not too many years in the five figures
I seem to be consistently off topic today but saw this link at Ritholtz's site too and thought you'd be interested and willing to comment on the RIA vs FINRA; is it as dire as the article portrays?
Probably would have helped if I'd actually inserted the link WRT RIA's vs. FINRA in my comment above (duh), it's http://www.riabiz.com/a/13580735
I would guesstimate several hundred dollars a month set aside as a base assuming you can do your own repairs on your home and vehicles. Much more if you can not. This is where it pays on teaching yourself to repair problems. At some point in your retirement, you will have to decide whether you want to do it yourself to save money, or hire someone else to accomplish the task.
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