The Interrupted Plan Ch. 5: The Interruptions You Can See Coming

Investment Background

Four chapters have treated interruptions as shocks — unpredictable events arriving at correlated moments. That describes some of them. It does not describe most of them.

A large share of the sales that damage a plan are funded by expenses the household knew about for years. The roof that was visibly ageing. The car approaching the end of its life. The tuition payment with a known start date. The parent whose care needs were plainly increasing.

None of these are surprises, and all of them routinely get met by liquidating investments. That is the puzzle this chapter is about: why a cost that is fully anticipated still arrives as an emergency.

The answer is not carelessness. It is that a known future expense with no specific date attached is handled by a different part of the mind than a dated obligation — and behaves, in practice, as though it were hypothetical.

The Wall Street Translation

Why a Known Cost Behaves Like an Unknown One

A dated obligation gets provisioned. An undated one gets postponed. A tax bill due in April is planned for. A roof that will need replacing "in the next few years" is not, despite being just as certain and considerably larger.

The difference is not the probability. It is the absence of a deadline to organise around.

misbehaving chapter 2 owns the general mechanism — mental accounting, and the way money and obligations get sorted into categories that are then treated inconsistently. This chapter is that finding applied to one specific and expensive category: the large, certain, undated household expense.

Obligation	Certain?	Dated?	Typically provisioned?
Annual tax bill	yes	yes	yes
Insurance renewal	yes	yes	yes
Roof replacement	effectively	no	no
Car replacement	effectively	no	no
Tuition, known start year	yes	years out	often not until close
Ageing parent's care	likely	no	rarely

The bottom four rows are where portfolios get liquidated, and the common feature is not uncertainty about whether — it is the absence of a date that would trigger provisioning.

The Ordinary Sequence

These sales rarely feel like a plan failing. They feel like sensible use of money that was, after all, saved for exactly this sort of thing.

The sequence is consistent. The expense becomes urgent. The reserve, if one exists, is sized for income interruption rather than for a large one-off cost, and covers part of it. The remainder comes from the portfolio, and the taxable account is the accessible one, so that is what gets sold — carrying the realised-gain cost chapter 3 described.

At no point does anyone make a decision they would identify as a mistake. The expense was necessary. The money existed. The plan is simply smaller afterwards, and no single step in the sequence looks wrong — which is precisely why this failure mode survives in households that are otherwise careful.

The one genuinely avoidable element is that the timing was never in question. A roof does not fail without warning; it deteriorates visibly for years.

The Fix Is Boring and Structural

The remedy follows the same principle as the-behavior-gap chapter 5: the decision must be made in advance, by someone calm, in a way that does not require judgment later.

Give the undated expenses a date. Not a prediction of when the roof will fail — an arbitrary but specific horizon that converts an undated obligation into a dated one. The date's accuracy is irrelevant; its function is to make the cost real enough to provision.

Provision separately from the income-interruption reserve. These are different instruments with different jobs. A single pot sized for one will be depleted by the other, and the household then discovers it has no protection against job loss because the reserve paid for the car.

Treat it as a recurring cost, not a windfall need. A household that replaces a car every ten years has a car expense every year — it simply arrives in one instalment. Recognising it as ongoing is what makes provisioning feel like budgeting rather than saving up for something.

None of this is clever, and that is the point. The mechanism this chapter describes is not defeated by sophistication. It is defeated by giving a known cost a date and a place to accumulate.

Division of Labor With the Rest of the Library

Question	Book that owns it
How does mental accounting sort money inconsistently?	misbehaving ch02
How do I bind a future self to a decision made now?	misbehaving ch04
Why must defences avoid requiring judgment at the worst moment?	the-behavior-gap ch05
What does a forced sale actually cost?	This book ch03
Why do predictable expenses still get funded by liquidation?	This book ch05

Executable Trading Rules

1. List every large expense you know is coming but have not dated. Roof, vehicle, tuition, family care. The list is usually shorter than expected and almost never empty.
2. Assign each one an arbitrary but specific date. Accuracy does not matter. The date exists to convert a hypothetical cost into a provisioned one.
3. Keep this provision separate from the income-interruption reserve. One pot serving both purposes will be emptied by whichever arrives first, leaving the household unprotected against the other.
4. Convert lumpy costs into annual ones when you think about them. A car every ten years is an annual expense delivered in one instalment, and treating it that way is what makes provisioning natural.
5. When a large expense does arrive, check the sequence before selling. If the plan is about to be reduced by an expense that was visible for years, the failure was provisioning, not the expense.

Relevance to a Retirement Portfolio

These expenses do not stop at retirement — and in retirement they land on a portfolio that is no longer being replenished by income.

retirement-decumulation-mechanics owns the withdrawal structure, and its buffer is sized against ordinary spending. A large undated expense is not ordinary spending, and meeting it by enlarging a withdrawal in a weak year is exactly the sequence-risk event that structure was built to avoid. The provisioning argument therefore applies with more force after retirement, not less.

For the reader this site is written for, this chapter asks for no change to the portfolio at all. The core is untouched. What it asks is that the household stop treating a class of entirely foreseeable costs as though they were surprises — because the portfolio pays for that classification error, and it pays at whatever price the market happens to be offering in the week the roof finally fails.