Money Issues In Retirement That Can Derail Your Plans

Don't let unexpected money issues derail your retirement. Learn about some of the most common issues and how to plan for unexpected financial surprises.
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A couple discusses retirement strategies with their financial advisor

There are certain key points that everyone thinks about as they prepare for retirement. How much money you need to have saved, what your budget will look like, and when to file for Social Security benefits and Medicare are pretty standard things to consider when planning for retirement.

However, everything in retirement is not the same for everyone. Everybody won’t face all of the same lifestyle and money issues. Some things that can happen are risks that are readily understood and you know to prepare for them, like medical bills. That’s just a normal part of retirement planning.

But there are other issues that could derail your retirement that you may not have thought about.

What are some of the unexpected events that lead to money issues in retirement?

Long-Term Care

Long-term care is distinguished from other health care expenses in that it goes beyond acute treatment. Long-term care involves providing help with activities of daily living. This includes things like bathing, grooming, eating, and moving.

You may not have considered your future long-term care needs, but there is about a 70% chance that a person that is 65 today will need some type of long-term care in the future.


Typical health insurance, including Medicare, does not cover long-term care. You can get a long-term policy to help cover the costs associated with paid care.

Friend and family

Having family provide for your long-term care needs is a common approach. However, it is still important to actually have a plan for how that will happen. Schedules may need to be modified, and living arrangements may need to change. It can reduce a lot of stress to work through this ahead of time.


Explore the different ways you can plan for retirement no matter what happens down the road.

Death of a Spouse

Apart from the obvious emotional devastation of losing a spouse, there may be direct financial impacts as well. This is particularly the case with Social Security benefits.

When a spouse passes away, the Social Security benefit you receive may decline. Even in the case of a surviving spouse that will continue to receive the higher benefit of a deceased spouse. If the surviving spouse was already receiving a benefit, that benefit will stop.

Social Security planning is crucial. Understanding your options and creating a plan to optimize Social Security benefits as a couple can reduce stress in a time that is already tremendously stressful.

Reduce your budget

When one spouse passes, the surviving spouse may not need to spend as much to maintain their lifestyle. If that is the case then the benefit reduction may be ok. It’s important to think about this beforehand and create a budget that could work with only one retirement income.

Life Insurance

If the surviving spouse will still need the income, then a life insurance policy may help. The death benefit should be enough to replace the lost income stream.

Economic Downturn

If the economy goes through a slump, your retirement may as well. For example, if you are working part-time in retirement that work may not be available. Your investments could also take a hit, although you should be set well enough that you can weather the storm.

Save enough

Even if you are planning to work part-time in retirement, save enough now if you can so that you don’t have to. Then if you can’t work, the shock won’t be as bad. Review your retirement investments to ensure you’ve got enough set aside that will get you through a downturn.


Nobody wants to think about permanent disability, but it can happen. In retirement, a disability can limit your ability to earn part-time income or completely change your lifestyle. There may be financial repercussions either way.

Insurance and savings

You can protect yourself from the financial risk of a disability by purchasing disability insurance and maximizing your savings. Making the best decision about your Social Security and other pensions helps too because these sources of income aren’t dependent on your ability to work.

Living Too Long

This is really just another way to say that you may run out of money, but it changes the perspective when phrased this way. Living too long certainly has a more positive spin.

Actively plan withdrawals

Having a good withdrawal plan that you allow to adjust over time can be a great way to protect yourself. Making small adjustments gradually in the amount you take from your savings as you start to see a need can help you avoid a cliff in the future.

Deferred income annuities

Think of a deferred income annuity as an insurance policy on living too long. It doesn’t start paying until a designated time in the future, so it can be cost-effective.

Caring for an Adult Child

Caring for adult children can come in many forms. Helping a recent college graduate get on their feet, providing support for a recently divorced or widowed parent, or caring for a disabled child can all be ways that you may care for an adult child.

Discuss the nature of the help

Be clear with your child about how exactly you plan to help them, to include the extent and duration of the help. This can potentially keep it from spiraling out of control and ruining your finances.

Also, talk with your child about if and how the help will be repaid. If it is a financial necessity that they repay you, make that clear to avoid the surprise later.

Unexpected Housing Costs

It is not uncommon for a retiree to have their home paid for by the time they retire. For many, this is a financial goal that they consider a necessary condition of retirement and they won’t retire until they meet it.

However, that doesn’t necessarily mean that housing costs go away, particularly as you age. If you expect to stay in your home and age in place you may need to update it over time to include things like ramps, handles, and other accessibility enhancements.

Make the changes now

One way to get ahead of these surprises is to simply make the necessary changes now. Consider getting rid of steps that may be troublesome as you are older or replace your bathtub with a walk-in. You may not be able to think of all the changes you might want to make later, so do some research to get ideas.

Set aside money for upgrades

If you want to wait to make changes, account for the future expenditures in your plan. Have money set aside specifically for the updates so they don’t wreck your budget later.

Bottom Line

When you plan for your future, you can’t possibly anticipate every single money issue in retirement that may come up.

The key to successful retirement planning is knowing how much money you’ll need to retire with, having a well-thought-out plan, and giving yourself enough room to allow for contingencies.

About Author
Brandon Renfro is a Certified Financial Planner (CFP), a Retirement Income Certified Professional (RICP), and an IRS credentialed Enrolled Agent (EA). He runs his own retirement and wealth management firm and is an assistant professor of finance. Brandon is a regular contributor to MoneyRates and several other financial publications. Brandon's wealth of expertise and practical knowledge have led to him being quoted in The Wall Street Journal, Forbes, U.S. News & World Report, AARP, Business Insider, and other national publications.