My Biggest Retirement Fear

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Last November was a bad month for us. My wife went in for major dental work. We broke an expensive iPhone. My Forester needed two new engine seals. Altogether, the bills amounted to thousands of dollars. So much for our frugal retirement budget that month!

money bomb with burning fuseEven though we have substantial resources and try to live below our means in retirement, there is something about a large, unplanned expense that pushes my buttons. It’s partly the shock, partly the pain of having to part with a large sum of money, and partly the worry that, if this one surprised me, what other expensive surprises might lurk down the road?

I’ve been happily retired now for more than eight years, with my wife joining me about six years ago. For the most part, things have gone as planned, or even better. The bull market has continued far past its average. Our portfolio has done well, and smaller amounts of money have trickled in from side hustles and family inheritances.

Our retirement has been about as worry free as anyone could hope. But there are still events that can send a jolt of fear through my gut. The most common one is this: large, unexpected expenses.

Are these concerns big enough to threaten my emotional or financial security in retirement? No, not really. They don’t keep me up at night. The odds of us running out of money are slim. But they do remain the biggest wildcard in our lifestyle, the biggest question mark over whether we’ll live happily ever after, or not.

So, let’s dig a little deeper into the nature of unexpected bills in retirement. There are a half-dozen kinds of surprise expenses that I’ve observed or personally experienced. Some of these may be familiar to you too….


We retired early thanks to two key factors: My high earnings, and my wife’s retirement health insurance benefits. My six-digit salary and our frugal lifestyle resulted in substantial wealth accumulation. But, without health insurance, we couldn’t have afforded the risk of early retirement.

Even though her pension is minimal, my wife worked enough years as a public school teacher to qualify for retirement health benefits. We do have to pay for them, nearly $700 monthly. But it’s good insurance, a group plan with a major insurer, and mostly takes the risk of catastrophic health expenses off the table for us: The family in-network out-of-pocket maximum is $4,750, and out-of-network it’s $9,000. Though, even with our good insurance, overall health care expenses including insurance premiums have been approaching $20K annually in recent years.

Many of you are not so fortunate, of course. It’s a truism that health insurance is the #1 factor keeping many potential early retirees in their jobs. I won’t dig into the issue now because Chris and I have covered it extensively in many past posts on health care here. It’s sufficient to say that, while some strategies are available, there is no simple, slam-dunk solution for the general population of near-retirees to obtain foolproof health insurance in the U.S. now, or on the horizon.

However, even with our good medical insurance, dental costs are a concern. We have no dental coverage. My wife has problem teeth, and we’ve see dental bills approaching $5K in recent years, with more such likely to come. The dental insurance I’ve seen available so far is underwhelming, with relatively low annual maximum benefits. A quick search on eHealthInsurance reveals annual premiums in the range of $300-$500 for an annual benefit of $1,000 to $1,500. Not to mention coinsurance and paperwork requirements. It’s just not worth it to us. I’m not afraid of a $1K dental bill. I am afraid of a $10K one!


What’s the biggest single expense in most of our lives? Buying a home, of course. And so it stands to reason that housing would be one of the biggest potential sources of unexpected expenses.

An aging home, especially if you’re trying to preserve its market value and appeal, is an inevitable source of major surprise expenses. Roofs, gutters, siding, furnaces, air conditioners, appliances, plumbing, electrical, yards. Some of those expenses are in the five digits and hard to plan for. Water and time are the big culprits. No near-retiree owning a high-maintenance home can be completely assured of their annual retirement budget.

Are you a do-it-yourselfer who can handle most maintenance tasks without hiring a contractor? That’s a huge financial asset. But it still doesn’t defray your material costs. And it gets harder and harder to do-it-yourself, as you get older. (I haven’t noticed many 70-somethings working on their roofs.) Even if you’re physically capable of the work, you may not have the time or interest. I’ve done nearly every kind of house repair over the years and enjoyed virtually none of it. Replacing a toilet seal is the last thing I want to be doing at this point in life, and a major reason that we rent in retirement.

Insurance is not much of a solution for home maintenance expenses either. It is sometimes possible to buy maintenance policies to cover major systems, especially at the time you buy a new home, but when I’ve glanced at the details, they’ve appeared to be poor values, with short terms, high premiums, high deductibles, and yet more paperwork.

Then there is property tax, your annual obligation to the local government. A recent chat with a friend from the northeast reminded me that taxes in expensive jurisdictions can easily be triple that of low-tax locations. And you aren’t in control of rates or changes. In general, property taxes don’t skyrocket from year to year, but sometimes political shifts mean they do.

Renting solves much of the potential uncertainty around housing expenses. You won’t (immediately) get hit with big maintenance or tax bills. The great upside of renting is that all your housing expenses are predictable for the duration of your lease. But then there is that significant wildcard. Spikes in rent are routine as local economies and housing availability change. Or the property you’re in could change hands. And the cost of moving in search of lower rent is nontrivial.


The second largest purchase for most people, other than their houses, is the vehicles they drive. Cars are expensive to buy or finance, and expensive to maintain once the warranty runs out. Repairs are unpredictable and can run into the thousands of dollars for major work.

Some people respond to that uncertainty by owning only relatively new vehicles. Or by leasing. Though most analyses, and my real world experience, indicate that the overall cost of owning and maintaining higher mileage used vehicles is usually less, to a point. For arguments’ sake, let’s say that vehicles with 30K to 150K miles are the “sweet spot.”

Unplanned major maintenance is the scary part. Last year a couple of seals started leaking on my Subaru Forester. The repair bill was going to be well over $1,000. And the car was only a few thousand miles out of warranty. Frustrating. After getting the quote from the dealer, I called Subaru’s national customer service line and pleaded my case with an attentive representative. He said he’d see what could be done, and get back to me in a few days. In the end they came up with a 50% cost reduction, credited directly to the dealer. The repair bill still stung, but not so badly.

Totaling a vehicle is another scary prospect. Most of us can’t do without our cars for any length of time. But, depending on your insurance and your liquid assets, it may not be a very big deal. We keep a $1,000 deductible on our auto insurance policies. And sales transaction costs on a new vehicle purchase are often in the $1,000 range. So it actually costs you maybe $2,000 to completely replace a vehicle after an accident. That’s a large unplanned expense, but would be manageable for most middle-income retirees, as long as it doesn’t repeat too often.

Emergency travel, helping out relatives, when there is illness or death in the family, is one of the larger wildcards in our lives. Buying plane tickets, booking hotels, and renting cars on short notice is usually an expensive proposition. I’ve seen bills in the $3K range for a family emergency. And it’s not hard to imagine scenarios involving more people or longer time spans where that could go much higher. Fortunately they are usually rare in most families.


It sounds like trivia compared to the major life needs and expenses we’ve just discussed, but certain pricey electronics have become essential to modern life. Many of us own expensive cell phones and couldn’t get through a day without them. Tablets and laptop computers run a close second.

Replacing a cell phone or computer at short notice is typically a $500-$1,000 expense. Yes there are ways to economize. You can choose older models. You can use a lesser known carrier. And that will help. For myself, software was my business, and I’ve always unapologetically owned the fastest and latest models from the largest suppliers. Life is too short to wait on underpowered hardware in my opinion.

Breaking a cell phone screen used to be a major disaster. But now there are repair shops in most cities that can swap out a damaged screen and get you back online for $100 or so. That’s a big improvement over the full replacement cost for most phones.

What about cell phone insurance? For years I let Verizon charge me $2.99/month for an insurance plan from a 3rd party insurer. Then one year I needed it in an emergency, and discovered the so-often dismal reality of insurance: The deductible was sky-high and the paperwork burdensome. For starters, I couldn’t even get the insurer to return my phone calls! So I called Verizon instead and cancelled the insurance. I’ve self-insured my electronics ever since.

Moral: read the fine print, and barring overwhelming evidence to the contrary, assume that most insurance policies for personal property are not worth it!

In our house, we own a smaller, cheaper TV and watch it a few times/week if that. So a TV is not an essential appliance for us, and we could replace ours if necessary for a few hundred dollars. Other households will differ. But, since it’s not being carried around in your pocket, purse, or backpack during daily activities, a TV is at much lower risk for theft or damage than your portable electronics.


We’ve already touched on emergency travel for illness or death in the family. Most of us will face that scenario at least a few times in our lives.

What about other family obligations? How about loans or gifts to children, relatives, or friends? Some of our largest unexpected expenses have fallen into this category.

Helping out family and friends financially is an extremely sensitive and personal area. It’s additionally complicated for early retirees, whose lifestyle may appear luxurious to uninstructed onlookers, but is in fact a carefully calibrated financial equation.

Being financially independent does mean you’ve accumulated significant wealth compared to the average worker. It doesn’t usually mean you can give much of that wealth away, without compromising your income and your independence.

Nevertheless, in some families, you could get hit with a request for money at short notice.

It’s probably wise to give some thought in advance to how you might respond. What needs justify financial help, in your opinion? How much can you afford? Will it be a gift or a loan?

While you can’t plan out all the details, you can at least map out your own personal philosophy for helping others in need, and that will have implications for your budget.


The last unexpected expense is one of the most unpredictable and frightening of all to me: legal trouble.

I haven’t studied the topic in depth, or had any personal experience, mercifully. But like most of us, I’ve heard stories, and seen friends impacted by unwarranted or unexpected legal challenges.

The most likely candidates for serious expense seem like liability exposure or criminal defense.

We carry umbrella insurance on top of our auto policy and, given the relatively low expense, it seems like a slam dunk for anybody with substantial assets. That said, an insurance company representative once confided in me that she hadn’t seen a single liability settlement in her several years at a sizable insurer. Personal liability lawsuits were relatively rare.

As with most insurance, I expect the insurers make out like bandits selling umbrella policies, with very few claims. But if you ever need umbrella coverage and don’t have it, you could be wiped out.

As for criminal law, I’d like to believe we live in a fair and just society and, if you live responsibly, you’ll never have a brush with the legal system. But I know that isn’t always so.

Nevertheless there are some personal strategies that I believe can minimize risk: Live in a small town or rural area, drive slowly and defensively, avoid conflicts with strangers, and don’t pick fights with individuals or institutions that are more powerful and have more resources than you.

If you exercise restraint and make intelligent choices, you can live a wonderful, happy life, even bend some of the rules, without getting into a fight you’ll lose. One of the most influential books in my life, How I Found Freedom in an Unfree World, has many more ideas and discussion along these lines….

The Biggest Expense of All

So there it is. Though I do not live in perpetual fear by any measure, my biggest fear in retirement, when I think about it, is a large, unexpected expense.

It’s a realistic concern. I’ve just reviewed a half-dozen such expenses that most of us won’t avoid completely. You can’t guarantee you won’t ever see these costs in your life, nor can you precisely budget for them.

So, aside from keeping some emergency cash on hand, what should you do?

Insurance is the traditional solution. And there are times when insurance is justified. I have no argument with home insurance, auto insurance, liability insurance, health insurance. (Or life and disability insurance while you’re still working.) The risks and risk pools are quantifiable enough that insurers can offer acceptable rates. And the downsides of going naked are extreme.

But most other forms of insurance, especially insuring personal property or less expensive transactions, look like a bad deal to me.

What other ways can you “hedge” risks? I’ve already mentioned living cautiously to minimize certain exposures. Lifestyle flexibility is always an asset: avoiding debt, keeping possessions to a minimum, maintaining good health, having the option to move or travel on short notice.

It can also be helpful in coping with unexpected expenses, and contribute to peace of mind, if you have some scalable retirement work income.

But there is one response to the risk of unexpected expenses in retirement that I avoided. I declined to work “one more year.” And another year after that, and another year after that, and another year after that….

If you use the fear of unexpected retirement costs to rationalize an unsatisfying job, and if you keep it up for too long, then you risk the biggest expense of all: throwing away precious years of your life, while never having truly lived.

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[The founder of, Darrow Kirkpatrick relied on a modest lifestyle, high savings rate, and simple passive index investing to retire at age 50 from a career as a civil and software engineer. He has been quoted or published in The Wall Street Journal, MarketWatch, Kiplinger, The Huffington Post, Consumer Reports, and Money Magazine among others. His books include Retiring Sooner: How to Accelerate Your Financial Independence and Can I Retire Yet? How to Make the Biggest Financial Decision of the Rest of Your Life.]

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  1. You are not alone!
    I share all of yours, with concerns for our children and their health being #1. The health insurance provided by their employers is very basic so should they have a serious illness it would be a family impacting event. As such, we supplement them at this time so they can afford a better policy and consider that a ‘rider’ for us as well. The one thing I cannot plan for that could wipe out our retirement is the serious illness or injury of a child.

  2. Excellent column. At 69 and five years into retirement we have experienced unanticipated expenses each year and this year is lining up to be the same. So far this year the HVAC system has failed and needs to be replaced and our 12 year old kitchen stove’s electronic system is failing and will need to be replaced – and we are only into June! In response, we will make some adjustments to other areas of our annual household budget that are flexible. But in reality, we accept these unplanned expenses are all part of life and will continue to come our way. Make adjustments in spending as you can and perhaps add some cushion in your budget to allow for the unanticipated!

  3. Costco has a very affordable dental plan. You must be a member ($65/year) and it is not available in all states. You may want link into this.

    • Thanks for the tip Steve, that does look worth investigating. (Readers can find it with a Google search.) Not currently available in my state. But I took a look at a plan in CA. No deductible, no annual maximum sounds compelling. But there is still a cost for most services, you have to use their network, and implants are not covered.

      • also very highly rated dental work in Mexico !

        • International medical tourism is a topic I’d be interested in understanding better. I’m curious if any readers (or Darrow/Chris) have any good information they would like to recommend to readers.

          Anecdotally speaking, my parents spent a lot of time in China and got routine dental work there (cleanings/fillings). They were happy with the work. Cleaning and exam was $30 in a expat serving facility. If they ever needed more extensive work like bridges/crowns, they would have been comfortable doing it there too. Contrast that with my wife’s single tooth extraction with a replacement crown, which cost roughly $2400 out-of-pocket WITH INSURANCE (I work for a large tech company so it’s decent insurance). Point being, there is the potential to safely geo-arbitrage for routine medical care and was curious if anyone has researched this and would care to share.

          • I retired to Mexico last year, and am thrilled at the medical care. Expats usually pay for routine/preventive care out-of-pocket because it’s so affordable and buy a catastrophic health insurance policy for the bigger things (mine costs US$1,800/year, about one-quarter of what I paid for COBRA my last year in U.S.). I love that doctors don’t rush you through visits like in the U.S., and will often give you their cellphone numbers, and even make house calls. Many doctors speak English, and quite a few were educated in the U.S.
            If I need long-term care, as another poster said, that can be had in areas with a lot of retired expats (locals tend to care for their elderly relatives at home) for about $2,000/month for a high standard of care.
            I live here, so don’t really consider it medical tourism, but I think the quality of the medical and dental care at a very affordable price is one reason to live here, and I see more and more people visiting from North American for medical and dental procedures.
            And if anyone is interested in veterinary tourism, I found vet costs for my cats are about one-tenth what I was paying in the U.S.

  4. Yeah this one hits home for me. The last three years I’ve been upgrading everything before I pull the trigger next year on retirement. Perhaps starting with everything new will help, perhaps not. Feel like a certain amount of this should be built into your budget. I have bucket now that grows every month for home maintenance and I plan to keep it in retirement. The uncontrolled expenses with potentially no ceiling… yeah terrifying. Thanks for sharing.

  5. Wait until you need cataract surgery and the choice is what Medicare offers or have the multifocal lenses, fixing astigmatism, and stents for glaucoma…none of which Medicare or supplements cover(not medically necessary). Cost an additional $10000. It’s a one shot I had it done. You only have one set of eyes.
    As far as health care we used all options…my husband got VA and I used cobra and then Obamacare. Which was cheaper than my companies option of $1000/mo for healthcare for me only until 65. Retired at 61.

  6. Wow, did I need this column today! I just met with my boss to discuss my retirement and decided to stay another 6 months for precisely the things you listed in your column. I’m 62 and had planned to retire next March at 63. But, if I go another 6 months, the health care I can get at a relatively affordable premium will last until I turn 65 and go Medicare. All things considered I think a wise move, but I don’t want to fall into “6 months more” trap every 6 months, lol.

    Thanks for the advice Darrow!

  7. Good article with excellent reasoning. But I didn’t see anything about long term care…that’s the Big One in my opinion.

  8. I have a dental discount plan which helps out for regular visits, cleaning, and restorative work. I save about %50 compared to list prices.

    I budgeted around $10,000 a year of unexpected expenses. Many years, I spent little but sometimes, it comes in chunks, like, last year’s house a/c replacement which cost me $4,000, but in the long run, it should pay for itself as it is much more efficient ($500 less in electricity bills per year). The fund gets collected in a mutual fund account, so I have already recovered the a/c unit cost :).

    Regarding the kids’ student loans, they do not have any. I paid for their education when I was working, so they have the comfort of owing nothing to no one. They do not drive new cars, and fortunately they turn out to be reliable ones. In case some repair needs to be done, it always pays to have mechanic friends, and also be mechanically minded.

    It is correct that we look at the unexpected expenses differently, when we are earning, and when we are spending what we have earned. I did not care about spending money if something unexpected happened when I was earning good money. But when you start budgeting expenses, and see something unexpected derail your budgeting, you get annoyed. Not because you cannot afford it, it is because it is unexpected and unplanned. One may have several millions invested, gaining and losing thousands of dollars each day, yet one gets upset about $1, 000 spent on an unexpected car repair 🙂

  9. Thanks, Darrow, for another excellent column. I have benefitted so much over the years (from before my retirement to after) from your clear and careful analyses.

    One thing on dental insurance: like you, I live in Santa Fe, New Mexico. I had dental insurance through my job, and when I retired, I asked the billing person at my dentist’s office if she recommended that I continue the dental insurance on my own, as in individual payer. She said: “It’s not good for us because they negotiate our rates down so far, but it is good for you.”

    So, I signed up for a Delta Dental plan through when I signed up for my ACA health insurance plan. The premium is $45.90/month and the annual benefit is low (premiums and benefits are both in the range that you describe). But two annual cleanings/exams, with x-rays are fully covered. When I needed a crown, I exhausted the annual benefit and had to pay some out-of-pocket, but the billing person showed me what the sticker price would have been if I had not had the insurance: much higher.

    Of course, this system is maddening: why should there be one sticker price for the pay-as-you-go patient, and one for the insured patient, but alas, that’s the case in much of medicine. You might want to try the insurance for a year and see if it works for you.

    • Thanks for the details CB, that’s interesting and helpful. I have an aversion to adding paperwork to my life if there isn’t an overwhelming financial benefit, but we’ll keep looking at dental insurance. Crazy spring in Santa Fe, but we needed the water!

      • Yup, we needed the water. Great to see snow in the mountains. And the wind and the hailstones yesterday were exciting…

        For what it’s worth–not much paperwork with my Delta Dental insurance. The premiums go to my 2% cash back Fidelity card, and the billing person at my dentist’s office takes care of everything else. I just pay what she asks for when I have something beyond the two cleanings/exams/x-rays. It all seems pretty clear and straightforward.

        I wish it were so simple with the BCBS I buy through the ACA for $899/month, with a $6,100 out-of-pocket maximum, but they are always denying claims that should be paid, and I spend hours on the phone with their terrible customer service. My 2019 healthcare costs will be about $17,000 and dozens of hours of paperwork and phone calls, just for me (my husband is happily on Medicare). $20,000+ including the alternative medicine things that aren’t covered by insurance.

      • Second the motion for Delta Dental insurance, and I also live in Santa Fe. Premium for my husband and I, $82 a month. The negotiated lower price with less out of pocket after benefit is exhausted, in addition to cleanings and X-rays fully covered per participant, makes it all worth it. However, no individual dental plan available here covers any expense related to a tooth implant, even if the tooth being replaced suffered from a medical condition. Tooth implants (3 of them) consumed the entire remainder of our health savings plan we brought into retirement. Thanks, enjoy your writings.

        • Clyde R. says

          It’s certainly not for everyone 65 or over, but Medicare Advantage (MA) is always worth looking at. I get my MA in south Florida and the rates are relatively competitive. And some of the big name carriers have networks that cover a very large percentage of medical practitioners and hospitals, etc. In fact, my monthly premium is zero and also 0 for primary care and dermatologist appointments, with $10 copay for specialists. Of course these need to be in-network. It also covers two dental exams and cleanings and routine xrays. I also get one basic eye exam per year included. If you have certain continuous generic medications, these can almost always be gotten at no cost from their mail order pharmacy in 90-day supplies. Of course, you can’t go to any Medicare doctor or hospital in the country on an in-network basis, like regular Medicare supplement. However, emergencies away from your HMO coverage are covered as in-network, and even non-emergency visits are covered at the reduced non-network cost. I bring up MA, because many simply dismiss it because regular Medicare is accepted almost everywhere. I’ve had MA for five years and have had only one reason to complain, and that was because a generic drug I take was supposed to be covered at a tier 1 level (zero cost), but they classified it as a “special” generic drug, which it’s not. I expect to ultimately be successful in my appeal, but it does take some time. A couple of hours at most filling out the paperwork. And whether you have regular Medicare or MA, the phone customer service usually leaves something to be desired.

  10. Thanks for the honest reflections. Yes, I had the $1000 root canal in January. And in 2016 hit the cap on our high-deductible plan with two cancer surgeries. But I can cope with those expenses and even plan conservatively with a high annual allotment. The issue that scares me most is long term care. Way too many unknowns and huge consequences. Our policy rates are going up another 40%. I followed the link in the May Best of the Web about new hybrid insurance products. Has me studying the issue again. Can you share your thoughts on that fear, or link to something if you’ve already covered it?

    • Hi Mike, thanks and best wishes. You might take a look at Long-Term Care Insurance: Beyond the Sales Pitch and Long-Term Care Insurance: Why We Aren’t Buying It which I wrote several years ago. It’s a complex topic and I’m not up to speed on the new hybrid products, but, as far as I can tell, the old style policies have only become worse values since.

      • Thank you for reminding me to re-read your earlier posts. Your suggestion of looking at it from a Present Value analysis is the best quantitative (i.e. non-emotional) approach I have seen. I followed your example to assess our 2003 policies, and could play with assumptions on rate of return, or what if premiums double every 10 years. Helped me to reach a decision with much more satisfaction.

  11. Kenneth Bajda says

    Darrow, one of the best articles I’ve read. With a little over a year and a half to my retirement, I have started to do an inventory of my needs, ie roof, vehicle replacement ( mine is 18 years old but looks new) etc. this gives me a heads up on what expenses are in my future so I can plan accordingly.
    Health insurance is the BIG expense that is hard to estimate. Best to be proactive in eating healthy, keep active and remember your not 25 anymore.
    Best to you and your family.

  12. I can’t tell you the number of conversations I’ve had with friends regarding early retirement and the risks involved. They want to know how much I’m living on, how I afford health insurance, large expences, and psychologically how I deal with a shrinking portfolio.

    I tell them that living off just a shrinking investment portfolio without any other source of income would be unnerving for me and I imagine anyone retiring before age 60 and 6+ years before SS and Medicare. Market risk and unexpected expences add to that stress.

    The best way I can think of in dealing with unexpected expences is to add a steady source of income. Rental property was my choice, an Annuity is another option, or of course a part time job or business.

    As Darrow says above “sufficient to say that, while some strategies are available, there is no simple, slam-dunk solution for the general population of near-retirees to obtain foolproof health insurance in the U.S. now, or on the horizon” This statement could apply to all unexpected expences. It’s unfortunate that it is so difficult to retire early in this country. You almost have to have something else going.

  13. Ed Carver says

    Darrow- We share your retirement fears. Our biggest concern is that over 1/3 of our living expenses are now spent on insurance needs (Health, Home, Car, Life) and those costs increase 5-10% each year. That is a lot of money for things that are critical, but only “payoff” when something bad happens. Be careful with dental insurance. Our experience is we spent $1,000 annually and then had to fight with insurance companies to get reimbursed. There were so many exclusions and fights we let it go and pay out of pocket. At some point, Congress needs to address that dental health should be included under medical since it is clear there are significant impacts to lack of good oral health (heart disease). None of my siblings can afford dental care and this concerns me greatly. While spending on the kids is still a very high expense it is at least something we enjoy doing. Hopefully, that tails off at some point, but we’re not holding our breath! Best Regards, Ed

  14. Steve Kohn says

    Excellent article (and comments) but never mentioned is my biggest retirement fear: inflation.

    Maybe even hyper-inflation, if the gov’t decides to pay off the national debt and decides cheap money is the best way to do it. (The only alternatives are higher taxes or lower benefits, and no chance either of them will ever leave Congress.)

    A life-long saver, it will pain me to see my life’s savings made worthless, able to leave nothing to children and grandchildren.

    — Steve, 72, retired five years, not rich but no debts

  15. Kevin Knox says

    An excellent and thoughtful post as usual Darrow – thank you!

    The Costco dental plans are very appealing – and only available in AZ, CA, FL, MD, NV, OR, PA, TX and WA.

    The 20K you’re spending on health care and insurance is most of our total spending for a year. We manage our withdrawals from our investments to keep our MAGI just above the Medicaid level – roughly 23-26K annually. A mid-range ACA Silver plan with a $0 eductible costs the two of us $33 a month after subsidies. At 62 (my wife is only 55) I’m stashing money in preparation for an INCREASE in our insurance costs when I go on Medicare.

    Our solution to the dental and long-term care cost situations is that we’re very comfortable with and knowledgeable about access to those things in Mexico, where we lived for 5 years (and where we return for several months each year to escape the summer heat here in Arizona). $25 dental exams and crowns for 10-20% of U.S. prices are routine, and we have helped many friends schedule “dental vacations” combining extensive dental work with a few days at the beach for less than the cost of a single crown or root canal in the U.S. And at Lake Chapala alone there are close to 20 long-term care facilities offering full care for $1200-1500 a month in a near-perfect climate.

    I realize that for you and for probably the majority of your readers a Mexico/Costa Rica/Thailand “Plan B” isn’t an option, but having retired way too early and without many options to bring in income we’re glad to know there are options.

    • Thanks Kevin, good to hear from you! I appreciate you sharing your extensive experience in Mexico with interested readers. A trip over the border is a potential Plan B for us, if dental costs get too punishing.

    • I am curious to know how you manage your assets to stay below the MAGI medicaid level. Do you intentionally forego equity investing? i.e. I can see how it would be easy to reach the medicaid level if you just stayed in low rate accounts at a bank.

      We seem eternally cursed to be just above MAGI. ACA insurance premiums thus would account for 1/3rd oor more of our annual retirement budget. Hamstringing some of the fun factor of retirement.

  16. Peter M Siegel says

    I was a bit surprised everyone focused on the fear, rather than how to manage the risk (and hopefully the fear). Obviously, you can’t do much to prepare for serious illness, but the car or the A/C? There’s just too much data out there– you know the chances the A/C will crap out over the next 10 years, so plan for it now. I have a set of “sinking” funds (savings buckets) I use for expected unexpected expenses (those that will likely happen in the next 10 years, possibly tomorrow)– car, teeth, electronics, water leakage insurance deductibles, etc.– and each year I don’t have a surprise, that fund gets bigger– some year I’m going to have a tooth implant, replace a water-damaged wall, and buy a new A/C. But it won’t be a surprise. Why? Because there are really good rules of thumb out there for estimating the expected surprises.

    But all that said, there are truly scary health things, including family travel, that worry everybody. I’m just saying I prefer to invest every year in preparing for the car, electronic, and utility surprises that you CAN plan for.

  17. That retirement health insurance benefit is golden, that’s huge. I’d have to work till I’m 58 to get the same and I just don’t think that’s in the cards…

  18. A nursing home in California will cost you about $100,000/year. A private paid caregiver through an agency will cost about $25/hour. My father paid about $72,000/year for a shared room in a memory care unit where he lived for 4 years. If you don’t have a spouse or children able to provide 24 hour care, you will go through your money soooooo fast. I look at our house as our long term care plan. We will sell and have enough to live many years in assisted living or nursing home. We don’t have children to leave house to, and I don’t want to die without spending this chunk of money on something!!! I was a medical social worker on a rehab unit and saw daily how a fall or car accident or stroke at any age could devastate a family financially.

  19. Leslie Davis says

    As for legal exposure, consider staying away from board positions of non profit organizations. I know about two acquaintances that end up paying $5000 and $500 to bring their respective organization out of debt. The board members were concerned about personal liability. Both were due to financial neglect of the executive director. I’m sure this has happens a lot.

    • Chris Mamula says


      I wish I could say you are being an alarmist, but I also have similar fears in our litigious society. This happened to my blogging friend.

      It’s unfortunate that this is even a consideration in anything but cases of extreme neglect or ill intent, but it’s a real concern.

      • Someone I know was a trustee on the Board of Education in his local school district. He actually resigned due to his concern that the direction the Board was heading in would expose the district and the individual trustees to liability issues. A sad situation, for sure, since he was very active in the school community.

      • Stephanie says

        I read the article by the MD who was sued. Yes, the answer is a good D&O policy. That’s how you get people to serve on boards, such as the HOA board in your condo complex. I would not serve on any board, especially one where I wasn’t even compensated, without making sure there was insurance in place to protect me. While it appears that the board this MD served on was not in the position to make decisions that would have affected the bottom line of the hospital, boards do make decisions that could affect the very existence of their company or institution. Unless the board member engaged in some type of fraud, it would be pretty unfair for them to end up in bankruptcy for making a bad business decision or voting for the incorrect approach in a given situation.

  20. Wife and I retired a couple of years ago at 53 and 50. We too have a public school system retiree health insurance plan. It’s an QHDP with HSA

    In year 1 I had a health scare that resulted in an Emergency room visit and blew way past the deductible. In year 2 it happened to my wife (both events were false alarms which resulted in hefty bills)

    It was nerve wracking to start our first two years of early retirement with those events

    But we had planned for the eventuality with deposits in our HSA

    After all was said and done we felt our retirement plan got a good stress test which we passed and that gave us more confidence rather than fear that we made the right choice

    It feels good to weather a large unplanned expense and be able to survive it

  21. Excellent column as usual, Darrow. I suspect your maintain a “healthy” level of worry about these matters but I think it underscores the importance or maintaining one’s spiritual life (however one defines that).

    You mentioned some pleasant surprises you’ve experienced in retirement (an inheritance, some blog income, and better than expected equity returns). Stating the obvious, life is full of good and bad – it’s best to ride the waves with a positive energy. Worry will only bring about more of those medical bills we dread.


  22. Very good article. thanks for this helpful info

  23. Jim Rice says

    Very good article. With regards to dental expenses, I’m having an expensive year, probably around $5,000. Looked into the insurance and agree just not worth it. I ended up getting a dental discount plan. Cost me $100. No waiting periods and no paperwork. The dentist office has the discounted cost and figure it at the office. Has already saved me $350 on some routine care and will save me another $700 on crowns and implants

  24. Darrow, you are a paradox. Maybe an enigma. Or perhaps a conundrum. I can’t decide which.

    You’ve been retired about 10 years. You should know your spending patterns cold by now. Including the unexpected or occasional minor things that you wrote about here. And yes, a $1K car repair and a $10K dental bill are both “minor”. You clearly have the assets to cover such things without even a ripple in your overall long-term plan.

    But yet you wrote that other article about no longer caring enough to watch your cash flow or your budget in a disciplined way. And now this article claims that you live in fear and/or great annoyance of unexpected expenses. These do not sound at all like the mental processes of someone who would retire at 50.

    • Ed Carver says

      Sorry, I didn’t see this article as Darrow being fearful of unexpected expenses rather more of an explanation on what things to expect in retirement and what to do about them. Thankful for him to share very personal issues with the rest of us.

      • That’s my point Ed. I don’t believe Darrow is actually fearful of unexpected expenses, despite his use of phrases like “here are still events that can send a jolt of fear through my gut”. Maybe I’ve been reading this site for too long. He’s a careful planner and the fearfulness written into this article, just don’t ring true. Plan for expenses, discuss examples, sure. But I think this article panders to his audience with a bit too much drama. But that’s just my opinion.

        • Larry: I think that I am perhaps as sensitive as you are to drama in retirement articles. However having read many of Darrow’s posts over the years, I think his general tone and demeanor is almost the exact opposite of dramatic. My wife and I have just passed the five year anniversary of our early retirement date (at 51 and 49 years old). Even though we felt (and still feel) that our retirement portfolio and income is strong and will cover us for the remainder of our lives… there are still times when I wonder if I have missed anything in my budgeting and financial plan. Real life stories such as Darrow wrote, help to provide a check on my assumptions, and provide (through both the post and the comments) some ideas of how to address challenges. I would say that health care insurance (as many have commented) is perhaps the largest variable in our plan. I guess I would rather know about both the positive experiences and challenges in a retirement journey…many bloggers only present the most positive aspects of their lives.

          • I agree Ed, this is the least drama-free of all the FIRE blogs. I guess the repeated use of the word “fear” pushed a button with me.

            I’m still working because of fear about health insurance costs in the next 10 years. My income streams are in place and more than adequate, but a big uncovered health expense would ruin everything. (I mean big as in life-threatening big, not a few K at the dentist.) I know that vehicles have to be purchased and maintained, and appliances and roofs go bad. Those aren’t fears however, they are realities to be planned for because they WILL happen.

  25. I do our budget every year so even though retirement is still a few years away I have a pretty good ideas what our annual expenses are. With that being said I also figure in an extra $3000-$4000 into my estimated yearly retirement budget estimation. The last few years have shown me that you need to plan an extra savings for those unexpected medical, home or life surprises.

  26. That $4,750 max out of pocket is pretty solid these days. We come in at $6,600 through my employer’s plan. My Dad also has dental issues and he still has some coverage through General Motors but the annual benefit cap is also an issue. Seem like he is always “waiting till January” to have something done so insurance kicks back in, but the bucket fills up quick! Take Care, Max.

  27. Thank God I live in a country with high quality taxpayer funded health care. I do have insurance here too but it is cheap and just a top up to help with queue jumping. The health care issue in the US seems to be becoming more and more a catastrophe for Americans who are not basically loaded (rich). It is not helped by seemingly obscene profiteering by the medical profession and industry which ramp up the costs for any given procedure to way above the equivalent cost in a comparable developed world economy. Surely the answer in many cases (your wife’s teeth) is medical tourism?

    I wouldn’t deride the cover that insurance can provide for liability. I own a property that I rent out and the next door neighbours claimed that the trees in my garden had caused subsidence in their garden. It was nonsense but my insurance company settled anyway for $9000. No cost to me and the insurance policy (home contents insurance) only cost me about $250 per annum.

    • Sounds good, but what is your tax rate?? Sorry it pushes my buttons when folks in other countries comment on our situation when they do not experience it-any in case there is wide of range of experiences here. If most folks want to make the effort to be reasonably frugal and save here in the States, they will be fine.

  28. I’m currently in the accumulation phase of my journey, but appreciate the insights of someone in early retirement. Great stuff, Darrow! Newly subscribed reader here and I see a lot of my own goals and interests reflected in your writings.

  29. Thanks for the great article. As many have pointed out we all seem to share the same concerns and worries. Ourselves, our roof that might have lasted another 10 years just experienced straight line winds of up to 100mph and hail 2x in the last month….insurance will not pay to replace the whole roof so into the wallet for the rest. 😉

    Okay, I will be frank and write I am not sure why I am posting this other than I seem to be sitting on the fence about where half of me agrees and the other half doesn’t on something you wrote.

    “Nevertheless there are some personal strategies that I believe can minimize risk: Live in a small town or rural area, drive slowly and defensively, avoid conflicts with strangers, and don’t pick fights with individuals or institutions that are more powerful and have more resources than you.”

    How does one totally and completely ‘avoid conflicts with strangers’? It seems to me there are more and more very unhappy and angry people out there looking to cause a ruckus.

    Even though I do “Live in a small town or rural area, drive slowly and defensively”, I have been the recipient of two road rage incidents whereby the crazed person has cut me off and forced me to pull over in the last 6 months. Living in a small town is not a panacea for avoiding crazed behavior! For what it is worth, I have had zero prior experiences in such behavior until retirement. Yes, I have had people blow past me in a hurry, but not jam there car in front of me and get out to provoke me!

    I try to live under the radar and bend with the wind. Both times these guys got whacko crazed because my ‘driving slowly and defensively’ just pissed the guys off to all heck. We are talking just under the legal speed limit inside of city limits. 28 in a 30.

    I managed to walk away without incident both time though being thoroughly provoked, physically pushed and prodded. If you’ve been through this you know that a person doesn’t feel good that ‘they did the right thing and turned and backed away’ nor does it make a fella feel manly. In fact such events do not feel empowering. I felt bad for a couple of days after the first event and I lost respect for myself after the second one.

    To some these scenarios are ‘damned if you do and damned if you don’t’. To me this enables the bullies to grow stronger in their behavior and to persecute other people who are just trying to live, get by and fly under the radar.

    MONEY. It is not just the obvious things. There can be hidden costs and surprises to an individual to have to be ever so vigilant about money in every way. Yes, I can try to live my life to protect my money but how else will I pay?

  30. Toward the end of our first day on the road of a greatly anticipated, five week cross country trip, the pickup truck towing our travel trailer started acting odd. That evening, we limped into a town 400 miles from home and found out the next morning that the truck’s transmission was failing. (Although we had planned to buy a new truck later that year, we didn’t anticipate having to purchase one by phone from our local dealer in an emergency situation like this one. I guess there’s a first time for everything. Luckily, the transmission was still under warranty which made the process less complicated and less expensive than it might have been.) While we waited that morning for the out-of-state dealer to patch the truck up enough to get it home, my husband took a call from our marina’s service manager. The boat, which he had dropped off for a service appointment before we left on the trip, needed a new engine, to the tune of approximately $10,000. Within an hour on that awful day, we realized we’d be spending roughly $60,000 in the very near future.

    Money – or other financial resources – represents both security and opportunity to me. As early retirees, my husband and I left the workforce only when we had accumulated enough of those financial resources to feel comfortable facing all of our regular expenses and any of the unexpected expenses that we could reasonably anticipate. While the events of that one day a couple of years ago (July 13, 2017 – no, I will never forget the date) made us heartsick, they also provided our 18 year old daughter, who was traveling with us, with an excellent, real life lesson – the necessity for a substantial emergency fund. The same financial resources that allowed us the opportunity to travel, would cover our backs when we were presented with the unexpectedly large invoices from our auto dealership and the marina. We missed only two days of our trip – driving back for the new truck and returning to pick up the travel trailer – certainly, a major inconvenience, but nothing like the devastation that might have occurred if we didn’t have the options our financial resources allowed.

    Anyone who is a fan of author Lee Child’s ex-military cop character, Jack Reacher, will understand if I say that one of our guiding truths is, “Hope for the best; plan for the worst.”

  31. Our house is paid off and I got a reverse mortgage line of credit to use for unexpected large spending shocks. It really has given us peace of mind in case of a really significant expense happening at a time when the market is down. We also plan to use it in lieu of long term care insurance. Something else to potentially add to the financial toolkit for those who are still in their homes.

  32. MrFiteby2023 says

    Great points and these are all unexpected expenses to be fearful of. One of the topics I feel is extremely important is family obligations.
    Others will disagree but my personal policy is JUST SAY “NO!”
    NO means NO! when it comes to loans and handouts. As we accumulate wealth we all have targets on our backs. Friends, family members, mooches. They need to learn to look elsewhere of simply get their sh*i together financially.
    I am very firm on this. I do not give handouts. Loans? If your loan someone money you’ll destroy a friendship.

  33. Great Article!

    I have been researching the dental issue myself as our cobra Delta Dental coverage will soon end. I noticed the Costco Plan is available in our State but not with any nearby dentists. On a recent visit to our current Dentist, I asked the billing person for a recommendation since the public Delta Individual plans seemed a bit costly for the benefit you get yearly.

    She suggested the Cigna Discount Dental Plan – which is not insurance, but kinda like the Costco plan, it basically gives you access to the discounted rates of Cigna’s network.

    I havent signed up yet – but just throwing it out there. The Costco Plan looked good, but seems to have a very limited network (even in our dense Delta Dental area).

  34. Hello,

    I wonder if, aside from a self made Xcel, there are any simple tools to calculate rebalancing your portfolio easier. I mean, I have to manually enter all positions, calculate irs %, compare with the target %, take into account new money or withdrawal needed, and then figuring out money transfers among the assets (funds and ETFs) to rebalance the portfolio.

    It is not rocket science, but takes me a good 3 to 5 hours every time.

    Any advice?