The biggest issues that new retirees tend to underestimate are not the standard things that everyone thinks about, but the surprises that come along that we either did not think about or did not plan for.  They are retirement surprises. We have assembled a list of items that may be standard to some people, and surprises to others. If yours is not on the list let us know by adding a comment. We will add it to our list for our readers.

Retirement Surprises

• Assuming that spending will drop after retirement
• Spending actually rose for many retirees
• More travel
• Travel to see the grand kids
• Gifts for the grand kids
• Health issues
• Higher inflation
• Living longer than the averages
• Not tracking your expenses and savings
• Car expenses and repairs
• House expenses and repairs
• Support of family members

Retirement Surprises – Plans Go Awry

No matter how much you plan, chances are that something will intervene to get in the way of your financial plan. Remember you are planning for the future which is a combination of some known factors and many unknowns that will crop up.

A common assumption is that you will only need 70% to 80% of your income after retirement. True you need less clothing since you are not dressing for work and you do not have to buy lunches and incur travel expenses to get to work. People tend to forget that they now have all of this time on their hands and typically what happens is that they spend money! It may be on travel or hobbies, but is money they did not spend pre-retirement to the same levels.

Travel To See Family

Even traveling to see the family involves expenses that you did not perhaps have while you were working. Grandparents often purchase lots of gifts for the kids as well.

You may be traveling more often to see them and doing side trips as well. Also you may be adding baby supplies including cribs, toys etc to your own home for when the kids come to visit.

Inflation

This is a difficult one to deal with. There will be spikes in the inflation rate and at other times almost zero inflation. Over the years, the average has been around 3%, which is a good number to include in your planning for retirement.  However you will need to adjust your estimates and savings level required every year to reflect the inflation levels and the overall cost increases for the things that you are interested in. For example if you like to go on cruises and they increase in cost every year by 5%, then you may want to account for this higher than average increase.

How Long Will you Live

People are living longer and longer. Start with the age that your parents lived, assuming that they lived an average life and did not die from accidents or other reasons. Add at least 10 years to your plan to adjust for the fact that we all are living longer and are healthier well into our retirement years.

Use a retirement planning tool to estimate your income, savings and expenses to assess if you will have sufficient funds available for your retirement. It is a good idea to stress test your plan by adding one or all of the following surprises:

• Live longer
• Higher inflation rate
• Large Surprise expense

Hang with Like Minded Friends

This may seem silly at first, however if you follow this advice, you will spend time with people who have the same attitudes about spending money, about enjoying life and about extending their retirement years.

If you hang around with people who tend to spend a lot more than you do, next thing you know you will be spending this money as well and may find yourself short of funds in retirement years. This is a hard fact of life, but it is something to be aware of.