Ultimate Retirement Guide Part 7 – Other Expenses

It’s about time again for another post in my Ultimate Retirement Guide Series. As a refresher, the goal of this series will be to provide an in-depth answer to this question: “what do I need to do to retire?” As well as any questions that could stem from that initial question. The goal is to have this cover all of the information I’ve looked at since I started really becoming interested in retirement saving, both early or traditional. I hope to mostly focus on items that have been relevant to me in my own experience and where I am in my journey at the time of writing. Throughout, I will try to present as unbiased a position as possible, but I’m sure that I will not be perfect.

So far, we’ve laid out the following five large steps needed to retire:

Determine when to retire.

Determine the amount needed to retire.

Save that amount.

Prepare to transition from working to retirement.


Currently we’ve been working through step 2 by breaking it into the following subsections.

The 4% rule of thumb

Other withdrawal rates

Other withdrawal strategies

Length of retirement (and sequence of return risk)


Asset Allocation

Different types of investment strategies (rentals, stocks, ect.)

Other expenses

Visualizing retirement

Last time we talked about investment strategies. This time I thought we should talk about other expenses and how they can filter into your retirement plan.


As with most things on this site, I am not a financial advisor nor another form of expert. Everything below should be taken as opinion. Always consult with your financial advisor before making changes.

What are “other expenses?”

For the sake of this post we’ll define and talk about two different kinds of other expenses, one-time and infrequent expenses. Both of them share one thing in common, they’re not usually your monthly (or whatever time period you measure over) expenses. I also usually define them as something that also does not fall into my regular categories either, but I believe the infrequent or single instance of the expense is more important to me.

For instance, an remodel to your house could be a one-time expense. As for the infrequent category, perhaps you go on a vacation once every year, or you buy a new car every 8 years. They’re regular expenses, they just don’t fall onto your regular schedule of budgeting, be that monthly or yearly.

How to Plan for These Expenses

When preparing for retirement you also need to consider some of these expenses and factor them into your calculations. We’ll cover each of them separately just to go into the nuances of each.


For one-time expenses it’s fairly easy to plan for expected one-time expenses when preparing for retirement.

One way to do this is to take care of the expense before retirement. If you buy a house at or before retirement then you no longer have to worry about saving that money any longer. For instance I’m setting aside a small amount now to cover my house at the time that I decide to retire.

Another method to avoid such expenses is to plan for them at the date needed. Let’s say you know you’ll want to redo your kitchen at some point after you retire, say 10 years down the road. Currently, you estimate it will cost $20,000 (somewhere in the middle of the range from this site the actual number doesn’t matter too much, we just need one) in today’s dollars. You can then crunch the numbers to see how much you need to set aside from your monthly budget to achieve that number, adjusted for inflation. Using 3.5% as my safe, inflation adjusted return, I’d need to lower my budget by about $132 a month for the next decade to have enough for the kitchen remodel as needed, assuming I set $1,000 aside immediately. I would then transfer them into lower risk, inflation protected assets until I have that amount set aside. This calculation can be adjusted with any savings goal calculator on the internet.

Of course not all expenses can be predicted. You can also use methods like what we’ll talk about below to kind of prepare for other unexpected expenses as well.


As for infrequent expenses there are two ways to handle them: increase standard budget and to have some cash set aside.

These two are basically two ways to solve the same problem of needing X amount more dollars every once in a while. For the first method, you just increase your retirement budget to accommodate the larger expenses. This allows you to absorb this cost no problem and spend it elsewhere between these expenses coming around. Instead of $48,000 a year you increase your budget to $60,000 where some $12,000 of that is either not withdrawn or saved to completely absorb that expense. This would require more savings or a higher withdrawal rate.

I’d also assume there is some effort made to shift these asset to some safer location such as I-bonds or a high yield savings account so that a sudden market downturn doesn’t take that money away.

The other option is to set some amount of cash aside, I’d assume monthly, and add it to a stack of cash or some other easy to access assets that you tap when these expenses come along. I do something similar with my leftover discretionary budget every month. This is functionally the opposite. If you have $60,000 a year as your budget and you cut it to $48,000 for some period so you can set aside the extra.

How to Tie This Into Your Retirement Plans

We’ve talked about methods you can use to deal with these infrequent expenses, whether they are planned or unplanned. Now let’s talk about how to add these methods into your retirement plans.

For those where you’re setting aside some amount of money each year, you need to have enough of a buffer in your budget to allow for this. Be it just having extra money in the amount of spending that you can easily cut or having a lower withdrawal rate that you’re comfortable bumping up slightly on occasion.

For the other, it’s having a small surplus that you set aside. This could also be treated as a discretionary extra budget. I know some people have used similar strategies for when they feel guilty about making big purchases.

Wrapping it up

I know it’s a little shorter than these posts usually are. But there’s not a huge amount to talk about with other expenses that we haven’t talked about later. It’s really just about having some flexibility in the amount of cash that you can set aside to cover these expenses when they come up, whether planned or not.

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