Let’s be real—retirement isn’t always the relaxing, stress-free life we imagine. Too many retirees get blindsided by costs they didn’t expect, from medical bills and home repairs to inflation-driven grocery prices.
These “spending shocks” can wreck a retirement plan fast.
What Is a Retirement Spending Shock?
It’s an unexpected, often large expense that wasn’t part of your original income planning. Think:
- Major healthcare costs
- Home repairs or renovations
- Long-term care needs
- Support for adult children or aging parents
- Car replacements or travel splurges
A study from Nationwide shows that clients consistently underestimate future costs—especially healthcare—and overestimate how far their savings will stretch.
Why It Matters
Spending shocks don’t just cause stress—they throw off your entire retirement income strategy. If you’re withdrawing too much too early to cover big surprises, you’re increasing your chances of outliving your money.
And let’s not forget the silent killer: inflation. Even moderate inflation can erode your purchasing power over a 30-year retirement.
How to Build a Shock-Proof Plan
- Get real about your lifestyle. Will you downsize or upgrade? Travel often or stay local? Add pet expenses? All of this should be factored into your plan.
- Build in a buffer. Set aside a flexible pool of money—an emergency fund for retirement—to handle the “what ifs.”
- Protect your income. Guaranteed income sources like annuities or in-plan guarantees can cover your essentials so a spending shock doesn’t force you to raid your investment accounts.
- Plan for health and long-term care. It’s one of the biggest wild cards. Consider LTC insurance or hybrid policies that combine life insurance with care benefits.
- Stress-test your plan. Work with an advisor to run scenarios: What happens if your expenses spike 10%? Or if the market drops 20% early in retirement?
Remember, Retirement Isn’t One-Size-Fits-All
Spending shocks are personal. Some clients want to travel the world. Others want to stay close to home and help raise grandkids. The key is building flexibility into your income plan so that whatever your goals, you’re financially ready to handle the detours.
A good retirement plan isn’t just about the numbers—it’s about being ready for the unexpected.
Let’s build you a strategy that can weather the surprises. CLICK HERE to schedule your Right Fit Call now.