Most of our clients are frugal super-savers who live well below their means. But for all clients, one common source of “extra” spending is often the needs of grown children. Here is a quote from Evan Simonoff’s article “Drifting Off Track” in Financial Advisor Magazine:

Probably the biggest single factor prompting clients to stray from the goals in their retirement plans is the financial woes of children and other relatives who require unexpected support. Whether it involves paying a son’s mortgage or a granddaughter’s college tuition, few financial plans developed decades ago anticipated retired clients undertaking these sorts of major expenses for a sustained period.

We discuss and encourage grandparents funding college 529 plans. We also encourage other generational financial planning issues. But perhaps one of the most difficult issues is parents trying to help their grown children learn to become financially responsible. One important reminder is that you can’t teach your children to learn to live within their means if you are continually supplementing their means.

There are other issues which can cause retired clients to deviate from their safe spending rates. Simonoff writes,

Contrary to conventional wisdom, Stanasolovich finds many retirees, particularly younger ones, often spend 125% to 135% of their pre-retirement income. “They have more time on their hands, they travel more and spend more,” he says, adding this can continue until the client reaches the mid-70s. “I spend more on Saturdays and Sundays than on Monday through Friday.”

This is certainly true. One advantage of working longer is that when you are working you have less time to be spending money. Want to spend less money in retirement? Get a part time job. There are other benefits to working some in retirement as well.

For clients with significant extra expenses in retirement it is important to run the numbers and see how it will effect lifestyle spending. Here is an example from Simonoff’s article:

She or her staff will sit down with clients and do a spreadsheet. “It will say you can spend $75,000 a year for the next 10 years and then we are going to have to go down to $60,000,” she explains.

Make sure that you know what helps secure your retirement.