Retirement often forces people to put their spending habits under the microscope in ways that they didn’t during their working years. While you might find that you’re not spending as much in some areas, there’s every chance that new expenses will crop up. Here are just a few that you might encounter.

Boomerang children

Whether they’ve moved back home or never actually left in the first place, it’s common for young adults to be living with their parents these days.

While this might be a welcome development, it often means larger grocery and utility bills (unless, of course, your children are able to chip in).

Assisting your children in other ways

Even if your children have left the nest and show no signs of wanting to return, there’s always a chance that you’ll be asked to provide for them in other ways. That might mean paying for weddings, uni fees, and even chipping in once they have children of their own.

Perhaps the biggest one, however, is helping them to buy a home. Home prices have risen to eye-watering heights, and depending on how much help your children need to get a foothold in the market, your generosity could have a material impact on your retirement.

Providing for elderly parents

It’s not just your adult children you might be called on to assist. Australians are living much longer than they used to, and if your elderly parents are still alive they might need support too. This might mean letting them move in with your family, hiring a carer, or making senior-friendly modifications to their home.

Divorce

For many retirees who go through a divorce, the financial repercussions are sometimes greater than what younger couples experience. That’s because older divorcees generally have more to lose in divorce settlements and less time to do the difficult work of rebuilding their financial lives. Loss of the family home can also be difficult, especially considering how unfriendly rental markets can be these days.

Higher than expected inflation

Even low rates of inflation can have a large impact on the purchasing power of your money over time. If high inflation strikes, it could force you to cast aside a lot of the plans you made leading into retirement. And if recent history has taught us anything, it’s that periods of high inflation can persist for much longer than governments, central banks and everyday people are comfortable with.

Unexpected medical costs

Medical expenses tend to increase as we age, and while the more routine healthcare costs (e.g. medications and visits to specialists) might be easy to manage, a sudden injury or diagnosis of serious illness could easily throw your finances into disarray.

Aged care

Even if you had plans to “age in place” instead of entering aged care, life can throw you a curveball and force you to change your mind. The good news is that there are residential aged care options that are relatively low-cost (and financial assistance from the government is available if you’re eligible). However, you might prefer a more well-equipped facility with all the bells and whistles, which can cost significantly more.

If you’ve given your child an early inheritance or a large sum to help buy a property, you might be wondering what would become of it if they were to split up with their partner. Could any of the money (or the assets purchased with it) go to an estranged spouse?

Even if you’re on great terms with your son or daughter in-law and believe your child’s relationship with them is built to last, it’s only natural to worry. Fortunately, there are legal steps you can take to help prevent the money you gifted your child from being eaten up by a divorce settlement.

Have your child and their spouse enter a financial agreement

One solution might be encouraging your child to enter a financial agreement with their partner. Often called a ‘prenup,’ this is a written document that lays out how certain assets will be divided in the event of a divorce.

If drawn up correctly (and with the help of a family lawyer), a financial agreement might be able to block any claims to assets by ex-partners and keep your child from getting embroiled in a drawn out and stressful dispute before the court. It can be entered at any time before, during or at the end of a marriage or de facto relationship.

Broaching the subject with your child might be stressful, and you could inadvertently put the idea in their head that you don’t trust their partner. But it’s important to remind them that no one knows what the future holds, and a financial agreement is just a tool to make sure your family is protected.

Loan the money to your child instead of gifting it

Another option is to consider loaning your children the money instead of gifting it. Unlike a gift that’s given with no strings attached, a loan is unlikely to enter the pool of divisible assets in the event of a relationship breakdown (and it will also be largely safe from claims by creditors).

If you do go down this route, you’ll need a solicitor to draw up a Deed of Loan, which will outline details like amount, term, purpose, and whether or not any interest will be charged. Many parents choose to forgive the loan at a later date, either while they are alive or in their Will.

Think about establishing a testamentary trust

Finally, if you haven’t given your child their inheritance yet but want some form of assurance that it will stay in your family’s hands after you’re gone, it might be worth looking into a testamentary trust. This is a legal structure that gives your assets to a trustee to hold upon your death. It will then be up to them to distribute the assets to your beneficiaries according to your wishes.

While a testamentary trust might not be an ironclad defence against divorce given the Family Court’s far-reaching powers, it can play a major role in quarantining your child’s inheritance from any claims by their partner.

Remarrying? These strategies might help 

You might want to consider one of the above strategies yourself if you’ve remarried and want to ensure a potential divorce doesn’t cost your children their inheritance.

Divorce, whether it’s yours or your child’s, can throw the plans you have for your family’s future in disarray. If you’re thinking of implementing any of the above options, make sure all parties involved seek out legal and financial advice.