Despite your best efforts to prepare for retirement, you have a good chance of being blindsided by some unanticipated expenses. A recent study by the Employee Benefit Research Institute found that 40% of retirees said their retirement expenses are higher than expected.
A recent CU Insight article, “4 unexpected retirement expenses,” discusses some things that may not be on your radar, when it comes to retirement planning.
Divorce. It’s somewhat surprising to see that the divorce rate for Americans over 65 has almost tripled since 1990, according to Pew Research Center. The divorce rate for Americans 50 and older has doubled during that time. Remarried couples are also twice as likely to divorce, as those who only married just once.
Even with these statistics, research now shows that more long-term couples are also splitting up. Among all adults 50 and older who divorced in the past year, 34% had been in their marriage for at least 30 years, including 12% who’d been married for 40 years or more.
AOL Finance reports that the average cost of a litigated divorce is around $15,000. If the divorce is contested, the costs can balloon to $50,000 or more.
Natural Disasters. There were thousands of retirees in Florida, Texas and California who were devastated by the loss of their homes or suffered major damage due to hurricanes, storms, and wildfires. In addition to these traumatic events, many were shocked to discover that their insurance policies did not cover these events or provided just partial coverage.
Fraud. You’ve probably heard that financial fraud is on the rise, impacting Americans with debit and credit card breaches, hackers who obtain personal and private information from credit bureaus like Equifax, malware designed to steal financial information, email scams, phone scams, and other illicit schemes. Annual financial fraud losses for older Americans can be as much as $36.5 billion, according to a 2015 study cited by the CFPB. An article in The New York Times also says that very few incidents are reported.
Another Housing Crisis. If profits from the sale of the family home are an important component of your retirement savings, your plans could be thwarted by another housing market crash. Just look at 2008, for example, when home values sank 18% in just one year. If the housing market is strong, and you’re planning to retire in a few years, it may be wise to sell your home earlier and downsize to your retirement home to maximize its value.