In preparing for my retirement, I have been very conscious of the need to understand exactly what my ongoing living expenses will be. What are the absolute necessary costs I have? Where might I be able to cut some costs? For example, will I really need a takeaway coffee every day - which can be up to fifty dollars or more?

To assist in this investigation, I scanned my visa bills and my bank accounts for a 12 month period.

The expenses I deemed necessary were; groceries, electricity, fuel for the campervan, fuel for one car (the plan is to sell one car and save money), insurance and registration for campervan and one car, service and maintenance costs for the vehicles, council and water rates, house and building insurance, health insurance, camp site fees for when I am on the road (I have budgeted for 150 nights), birthday and Christmas presents for grandchildren, phone and internet, an allowance for clothes expenditure, an allowance for dining out( I am a sucker for breakfast in a small out of the way café),and lawn mowing costs for when I am on the road.

I have tried very hard to be as thorough as I could and think of all the necessary costs. Hopefully, I have not missed any and if you believe I have, please let me know.

So where will I save on “unnecessary” expenses? I think I can give up gym membership, excess coffee expenditure, new running shoes every four months (extravagant I know), Spotify premium subscription (will switch to the free version and live with the advertisements), no more Australian Wine deliveries every quarter, and I will need to give up my occasional cigar – which I know is not good for me anyway.

I felt confident in my figures and my budget, until this week when an unexpected expense put a hole in our savings and my theory.

If you have been a regular reader of our blog, you may remember that I have written previously about my beautiful border collie Scout. Scout is now over 7 years of age which I do not think is all that old. Comparing dog’s years with human years under the new revised scale she is 47, which is still not that old. Although she has started going a little grey in her face and the vet does now classify her as a senior dog, I would hate to think what the vet would classify me as, at the age of 64?.So, what does Scout have to do with my unexpected expense?

Last Thursday, I took Scout to the beach near home for a swim and some exercise – Scout likes to chase sticks. I have thrown the stick maybe five of six times without any issues, I throw the stick one more time, she chases, turns quickly and stops, no whimper or yelp, hops back to me without the stick and with her back left leg of the ground. I thought she may have twisted her leg, and it would all come good. We went for a swim and went home. I was fairly confident she would be fine by the next morning, but unfortunately, she was not.

This is now the expensive part of the story.

I take Scout to our local vet, who I have gone to with various dogs over a long period of time. Scout needs x-rays, requiring her to be given anesthetic, which means she needs a blood test to ensure her liver or kidneys are healthy and will not be affected by the anesthetic. I leave her at the vets.

In the afternoon I return to pick Scout up and pay my $575 bill for x-rays, blood test and medication - to be told that she has ruptured her anterior cruciate ligament and will require surgery. Depending on the procedure, the cost is anywhere between $3,000 and $5,500 – an unexpected expense!

I love my dog and at no stage would I question spending the money, however it makes me think about my budget in retirement.

No matter how meticulous your planning and believing you have covered all the necessary expenses, large and unexpected expenses do and will occur.

The solution is simple, and my good friend PK has often written about the need for an emergency fund. This is a separate account with an amount of maybe $20,000 which you never draw on unless there is an unexpected expense which you have not catered for in your budget.

As a footnote to this story, and the worst part of Scout’s surgery - for the first 4 weeks of her recovery she needs to be kept confined without any activity… she is a border collie so wish me luck!