How retirees can plan for expense shocks
Retirees can better manage unexpected expenses by planning for major purchases and repairs before leaving the workforce, according to financial advisors. Strategies include assessing home, vehicle, and health-related needs, incorporating anticipated costs into cash flow plans, and building emergency funds or credit access. Testing retirement income while still employed helps ensure financial readiness and reduces stress during early retirement.
- ▪Financial planners recommend addressing large expenses like vehicle replacements and home repairs before retiring to avoid drawing from retirement assets.
- ▪Advisors suggest clients "test-live" on their projected retirement income to determine if they can maintain their desired lifestyle.
- ▪Health procedures not fully covered by public plans should be prioritized before retirement while employer benefits are still available.
- ▪Setting up a home equity line of credit before retiring can serve as a backup for unexpected expenses.
- ▪Planning for foreseeable capital expenses helps retirees avoid withdrawing from investments during market downturns and reduces financial stress.
- ▪A structured plan for expense shocks provides retirees with greater peace of mind and spending confidence.
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Open this photo in gallery:Clients should address potential big spending items while they still have employment income.SeizaVisuals/iStockPhoto / Getty ImagesShareSave for laterPlease log in to bookmark this story.Log InCreate Free AccountNewly retired clients are often fearful of surprise expenses such as a leaky roof or a car repair bill while on a fixed income. Barbara Knoblach, certified financial planner (CFP) at Money Coaches Canada in Edmonton, says clients need to anticipate the unexpected before retiring. “Most of these expenses are foreseeable with proper planning,” she says. Specifically, she asks her retired clients about the condition of their homes and vehicles, whether appliances might need replacing, and other possible repairs. Depending on their answers, Ms.
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