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Dealing with unexpected retirement expenses

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Henry K. "Bud" Hebeler, former president of Boeing Aerospace and author of "Getting Started in a Financially Secure Retirement," gives Jenny high marks.

"It's not just what happens when he dies, it's all of the surprise events in retirement that cost money," Hebeler says. He also notes that depending solely on the government for most of your income is foolhardy.

"Don't forget the government is a sovereign power and can change the laws and pensions and tax rates and health insurance premiums," Hebeler cautions.

Hebeler's advice: Take nothing for granted. "It's commonly assumed that the government won't change pension rules for current recipients, particularly the military, but if the government is in economic trouble, even military pensions are fair game."

Means testing, changes in the index used for increasing military and other cost of living adjustment (COLA) pensions, and adjustments to medical insurance coverage all signal reductions in benefits.

Bottom line: "Unless you are a Microsoft heir, most people better find a way to start saving 20 percent of their income for retirement," say Hebeler, who now runs a retirement Web site,

Pitfalls of keeping up with the Joneses
Consider this scenario: A couple eyeing retirement buys their dream home. It's bigger than the one in which they raised their children and also comes with a hefty price tag. Even though they've sold their older home, they now face another decade or two of payments. That means they won't pay off their home until their mid-70s or 80s.

Dr. Marion Somers, author of "Eldercare Made Easier" and an eldercare expert, says to rein in status spending now. Instead, buy used cars, forgo the bigger house and make even your smallest expenditure count.

Bottom line: Cut up those credit cards and pay down your debts. Gauge your housing needs realistically. Before you relocate, look past the present. Will you one day need to return to be near family? Will your new home see you through your entire old age? And do you really need that McMansion or brand new sports utility vehicle? "Say, 'Yes, I'd like to have it, but I've made the decision a new car is a waste of money,' and don't feel badly about it," Somers says.

Preparing for health care expenses
Arthur Koff, who runs, says lots of retirees face barely scraping by because they're not fully prepared for changes in health and medical problems.

Estimates for out-of-pocket medical expenses not covered by Medicare run higher than $200,000 for 55-year-olds who will retire in 10 years, Koff says. "Very few couples have planned for this, resulting in retirees looking for employment after they thought they would no longer need to work."

Next: Be prepared for the unexpected.
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