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Dealing With Unexpected Expenses in Retirement by Glen Eagle CEO Susan Michel

Dealing with Unexpected Expenses in Retirement by Glen Eagle CEO Susan Michel

Glen Eagle Advisors, LLC, a registered investment advisor located in New Jersey, was founded by CEO Susan Michel. In this article, Susan discusses key strategies to handle unexpected expenses in retirement so you can enjoy your golden years with greater financial resilience and peace of mind.

Addressing unexpected expenses in retirement can be challenging, particularly when they disrupt a well-thought-out budget. Unanticipated costs such as medical bills, home repairs, or sudden vehicle troubles can strain limited retirement income. However, with planning and proactive steps, it is possible to manage these surprises without depleting your nest egg or accruing debt. 

Let's explore strategies to help you navigate unexpected post-retirement expenses.

Expect the Unexpected

Unexpected expenses in retirement aren't exceptions to the rule — they're the norm. A recent study, for example, showed that 75% of retirees have experienced setbacks in retirement. Of those, 20% experienced significant financial challenges. [1]

Build an Emergency Fund

Having an emergency fund remains an essential aspect of financial security during retirement. A good rule of thumb is to have three to six months' worth of living expenses saved and easily accessible. Depending on what life throws your way, you might need a bit more tucked away. This becomes especially pertinent in light of a 2023 study by the National Council on Aging, which found that 80% of Americans aged 60 and older cannot afford to pay for a financial emergency,   underscoring the critical need for a well-stocked emergency fund, [2] 

Diversify Your Investments

Ensuring financial stability during retirement is vital, which means not solely depending on a single income source for living expenses. Investing and diversifying across various asset classes and regions is a key strategy to manage risk and generate a consistent flow of income. Building diversified income streams can help cushion the impact of unforeseen expenses and support a comfortable retirement. Diversified income sources can also include annuities, rental income, dividends, part-time work or consulting, and more.

Incorporate Insurance

Insurance is an important component in safeguarding your financial well-being throughout retirement. Policies such as long-term care insurance or comprehensive umbrella insurance are instrumental in covering unexpected costs and helping to preserve your retirement savings for their intended use. This is particularly relevant considering a study that found roughly 70% of individuals reaching age 65 will likely require some long-term care in their later years. [3]

Stay Flexible

Stay agile and adaptable. That may mean downscaling, relocating, or adjusting retirement lifestyles to suit the circumstances.

Leverage Professional Advice

Just like you wouldn't take legal advice from your dentist, avoid depending on anyone but a financial expert for advice on money matters. Leverage a financial advisor's expertise to guide you through retirement planning complexities.

Take Prevention Steps

Tackling unforeseen costs requires proactive measures. For example, regular health checks and ongoing home and vehicle maintenance can significantly reduce the potential drain on your retirement fund.

Don't Forget About Taxes

In retirement, tax implications are quite different than when earning regular income. Understanding these changes is vital to ensure that taxes don't become an unexpected cost themselves.

Plan Your Legacy

Making a well-thought-out legacy plan helps you pass your assets to your loved ones smoothly. It also removes any bumps in the road that could come up unexpectedly later. By planning, you make sure your wealth is used as you wish, making things easier for your family when needed.

With the right plans in place, you can enjoy a fulfilling retirement. Think of it this way: getting ready for the unexpected during retirement is a lot like running a business. You need to be ready for anything, make smart plans, get good advice, and stay open to change. Whether you're already retired or still working, it's always the right time to start planning for a secure retirement.


 -- Susan Michel is the founder and CEO of Glen Eagle Advisors, LLC, an SEC-registered investment advisor located in New Jersey. Offering retirement planning to business owners and wealth management, the Glen Eagle team takes an educational, holistic approach to meeting their clients’ long-term goals. Susan is a member of the Enterprising Women Advisory Board and a past recipient of the Enterprising Women of the Year Award.   She was recently named an Enterprising Women “Top 20 in 2020” Award Winner.


[1] https://www.edwardjones.com/us-en/why-edward-jones/news-media/press-releases/retiree-course-corrections

[2] https://401kspecialistmag.com/80-of-older-americans-cannot-afford-a-financial-emergency/ 

[3] https://acl.gov/ltc/basic-needs/how-much-care-will-you-need