Unexpected Dentistry

This is a guest post by Robert, who lives in Calgary and works as a financial adviser. He is married, has three kids and plans to retire at age 35.  Robert and his wife then plan to return to school and become teachers, eventually living and working overseas.

I have an irrational fear of dentists. I told someone at work about it, and she almost gagged at the mere thought of a dentist, so I’m not alone. A few weeks ago, one of my teeth started bothering me. But because of my desire to avoid dentist offices, I ignored it. After a few days, the gum started swelling and then the side of my jaw became swollen. I couldn’t postpone it any longer.

The good news is that I found a nice (but expensive) dentist who fixed me up temporarily. The bad news was: root canal. Ugh. I took a course of anti-biotics and scheduled in the root canal for a few weeks later. The whole thing went fine, but the bill was almost $1500. This is why I’m very glad to still have some benefits through work. I was fortunate to have been offered a $1500 health spending account (for my entire family), which will all be used up paying for this root canal.

But what happens when I’m no longer working? In fact, I found out after the root canal was done that this isn’t the end of it. Now I need a crown to protect what’s left of the tooth. That’s going to set me back at least $1000 and I no longer have benefits to draw on. Not only that, but $1000 is a significant departure from my regular monthly budget of around $3500. When I’m retired and living on a fixed income, I will no longer be able to dip into excess earnings to cover unexpected expenses.

There are two possibilities to deal with unexpected expenses like this. One is to have an emergency reserve. Hopefully I won’t have a root canal each year, but last year it was a repair to my car and the year before it was repairs to my fridge. It didn’t bother me at the time, but it seems that I can always count on $1000 – $2000  worth of “unexpected” expenses. Having at least this much cash accumulating over the year in a savings account would be the best solution. Alternatively, having a line of credit available that could be paid back from monthly savings, as long as it was used for nothing but emergency would also be acceptable. If neither of these are in place, it would mean selling investments which, depending on the economic environment, is likely to permanently reduce my ability to produce monthly income.

Where do you find unexpected expenses come from? How much do you normally need in a year to cover them? Where does the money come from?

13 thoughts on “Unexpected Dentistry”

  1. Robert, I have 10k in an “oh shit/oh wow” fund. In late 2008, I hadn’t used this emergency fund for a couple of years, so bought Suncor at 24/share. Just sold some recently for 44, so that was nice.
    I keep mine in my USD account so it’s kind of hard to get at and deposit little unexpected amounts in there throughout the year. I’m using 4k of it on our 2 month RV trip down south this summer.

  2. My friend ran into a similar dental bill and does not have any coverage to speak of. Apparently his dentist was willing to cut his bill by almost 40% to help him out. (guess the insurers are getting a raw deal) I guess it doesn’t hurt to ask for a reduction if you are in a jam.

  3. Ouch. I’m in the same boat as Robert wondering what costs potential health costs might crop up once retired. More concerned about it since I also have two young kids to think about. I’d love to hear more stores and experiences from early retirees and how much they spend on regular and irregular health costs. Is it better to buy into a group plan once you’re no longer covered by work or just pay as you go and take advantage of the medical tax deductions? Thoughts anyone?

  4. I think there is an importance in distinguishing between health and other one-time expenses. As you get older, the health expenses will go up if you look at the probabilities. I would advise ramping up the ‘health emergency’ fund as you age.

  5. My gosh .If having to cover an unexpected expense of $1-2000.00 each year is going to be such a hardship maybe you need to rethink retiring at age 35.I honestly don’t know how with three kids and a wife you can accomplish this unless you are earning six figures and have at least 7 figures in investable assets.Maybe you will have this by 35 but I didn’t and I am a dentist ! I am 46 now married with two kids and no debt and a good nest egg and net worth but retirement for me now is a pipe dream as my kids are 7 and 10 and unless I could see that there will be no post secondary educations to fund I will keep drilling and plugging away.For our household these unexpected expenses seem to come up several times per year and there does not seem to be any consistency as to where they come from.Except the house maintenence expenses I guess which should be budgeted for and should not be regarded as “unexpected”.

  6. The fewer “things” in your life, the less likely it is that you’ll have unexpected expenses. The alternatives are more insurance and budgeting more money for the savings account.

    So reduce (minimize) possessions and increase savings.

  7. My husband has had to retire unexpectedly this year due to health problems. He’s 47. We were pretty much unprepared for this retirement, so the retirement plan is we tighten our belts significantly and I go on being a long commute wage slave for the foreseeable future. However, the way we’ve dealt with health expenses such as you’ve pointed out (since his company does not have a retiree benefit plan, and my plan only covers a portion of any health expense) is to redirect a good portion of monthly savings to health care. So far this year, we’ve had almost $4000 of health expenses that have not been covered through an insurance plan of some sort. Our health account is down to $254, so hopefully the hits stop coming long enough for us to build that back up. Otherwise it will start eating into other emergency and investment funds.

  8. Tim get a second opinion on the crown, they told my wife the same thing and our “new dentist” told us it was un-necessary that a filling on top would be just fine of course the filling was about $140 versus $1000 so you can see why it was “recommended”

  9. My current retirement budget has $350 a month set aside for medical/dental. When I write something like this in my budget I mean it…that $350 goes into a separate section of my savings and is to be used only for those expenses….and i do not think that dental and medical are unexpected expenses..it’s gonna happen, like it or not, and generally when you least expect it….be prepared.
    We are not yet retired, but the countdown is on. Now we are covered but will lose that when hubby stops working–but we know what to expect.
    Now, when the 2 year old lab torn her tendon….and the operation was…gulp…about 2 grand…well, that SUCKED….

  10. I appreciate all the comments. I guess I didn’t make my point very well, but many of you made it for me. There are expenses that may or may not be unexpected, but which don’t fall inside of a monthly budget. Even so, we must be prepared for them. I really like the idea of saving up a certain amount monthly in a separate savings account. My parents called it HOK savings (heaven only knows). They also saved up for one-time annual costs, such as property taxes, in a similar way. This is why I would never retire with JUST enough. I’d much rather have a buffer, extra income for those unexpected expenses.

  11. I relate most to @George which is why our retirement plan includes selling our large house (we just listed it yesterday) and moving to a co-op which is much smaller and has a fixed utility cost. This will not account for unexpected costs such as health expenses not covered by insurance but it will help accomodate them in our budget.

    By the way, I’ve had dental expenses twice that caused me wonder just what a tooth is worth …

  12. As others have noted, clearly any retiree has to have a buffer for irregular expenses. How much should that buffer be? Can’t say. 🙂

    In your case or anyone else who “retires” at a young age – if you are planning to still work part time or in a new profession (ie teaching in your case), then I don’t think you have to worry about a buffer so much.

  13. Mike, you’re right that I and other young retirees have the luxury of being able to work temporarily or part-time. Elderly retirees should really consider having a health fund. In my case, I’ll spend the next three years not working, two of which I’ll be at university. So I can choose to work part-time or temporarily now, or I can borrow against my future salary. I’d much rather pay cash.

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