Avoiding Financial Planning “Surprises” – Part 1

Video Transcript

Hi folks, Dave Piatkowski with Dickinson Investments. I run most of our financial plans here with our financial planning software. I’d like to take the time with you today to go over three quick things that I see that tend to be pitfalls for folks in retirement.

1. Over-helping family. Who doesn’t want to help out family? Obviously, most everyone wants to help their family. The problem is that a lot of people don’t think about the detriment that long-term financial help can have on your own personal financial plan.

So, when we talk about helping adult children with buying another house, or upgrading their house, or paying grandchildren’s tuition for college or parochial school, or daycare costs…these things all add up. If they are a one off, an emergency, a one-time thing, it doesn’t tend to do that. The problem is they almost never are. And Mom and Dad or Grandma and Grandpa always want to help out, and in many cases they over help out.

Because in retirement we are for the most part on a fixed income, as the elders we are not the family bank anymore. So that’s the number one thing I see.

2. People tend to forget about the big ticket periodic items that come up. When they look at their budgets, they think this is going to cost them this many thousand dollars a month to just have a nice retirement. But they don’t think about, hey, every six or eight years I might want to buy a new car or lease a new car – or we have to have this tree taken down in the back yard for $1,500 – or put in a new driveway, or new siding on the house, or put a new roof on the house, or any number of things. We call those the periodic unexpected expenses that we should expect, but typically we don’t.

We want to be cognizant and aware of those things. An example is when a neighbor has a flooded basement or a sewer backed up, a lot of times insurance may cover these. Some times they don’t. But these big ticket items tend to blow up the budget when they are above and beyond your normal living expenses for each month.

3. Entertainment. As people get into retirement, they forget or don’t fully realize that they are going to have much more time on their hands in retirement. Instead of working five or six days a week and then having a little bit of free time in the evenings or weekends, you are going to flip that on its head.

You’re going to have Monday through Friday free for you to run errands, which becomes code for “let’s go out for breakfast or lunch,” then stop at Home Depot or the shopping mall or what have you to purchase things. That’s all fun and nice and it gets you out of the house, but it adds to your budget.

So, we will see many times when running the financial plan that after folks have retired for a couple of years, maybe those first few years they’re spending more than they initially thought because they have so much time on their hands. They are still in their 60s or early 70s where they have a lot of energy and want to do some things. We just want people to be cognizant of thinking about those things when they retire.

To reiterate, financial planning “surprises” can include over-helping family, big ticket periodic items, and entertainment. Let’s be cognizant of those items as we embark on a fun and successful retirement. Thanks.


[Financial Planning and Investment Management Services offered through Dickinson Investment Advisors, Registered Investment Advisor. Statistics and market information provided by Litman Gregory Advisor Intelligence.]

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