Thursday, October 15, 2009

Expect the Unexpected

No matter how comprehensive a plan you have and how hard you have tried to anticipate life’s twists and turn, unexpected events will undoubtedly create some unwanted excitement from time to time. Don’t panic. Your retirement plan is meant to be modified as necessary along the way. If you build in a little bit of a buffer, hopefully fate won’t deal a blow that knocks you entirely off course.

Even if you have factored inflation into your budget – some expenses may be affected by more than the Consumer Price Index. Our condominium assessment has increased 26% over the past 18 months. In addition, we have had 4 special assessments levied – totaling several thousand dollars. Parking in our neighboring city school lot has increased 25% during the same period. During our search for individual health care, we have had to raise our budget to obtain the coverage we need. Fortunately, some other expenses are coming in lower than budgeted (i.e. transportation, clothes, and dry cleaning). And we were able to drive down our condo and auto insurance substantially with some active comparison shopping. Keep looking at your actual expenses and make whatever adjustments and decisions need to be made to keep you on track.

Other outside influences will inevitably come to bear on your life. You might have grown children that ask for financial assistance, or parents that need more support than expected. Your ability to respond the same way you did when you had a full time job could be constrained. Where you threw money at trouble in the past, you may now need to be more creative about how to help the ones you love. You should have more time – even if you have less money. Time can often be much more valuable.

To minimize your exposure to unpleasant surprises, be sure that you understand the specific attributes of the locale in which you plan to retire. How high are property and sales taxes? Is there a state-subsidized health plan for which you would be eligible? Does your city or state have budget problems that will filter down to you as a resident? What services or special programs are available to seniors? Is there convenient and affordable public transportation? Your decision about where to retire could be influenced by these factors or others.

Finally, good health is precious and sometimes tenuous. Invest in taking care of your body. We only get one vessel in which to travel through this life. If you abuse it, it will show wear and tear, and require expensive maintenance, additives, and parts replacement. Put down that sugar-laden can of soda, drink a big glass of water, and take a walk around the block. Get plenty of sleep and be kind, but stern, with yourself. I’m taking my own advice now – but I wish I had done better fifteen years ago.

You don’t need a crystal ball to plan effectively. But do think beyond the day-to-day and expect the unexpected.

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