Financial planning tools and services to put you on the path to the future you want
Your guide to financial planning and retirement
Connect with peers and experts
Get to know the people behind the company and the mission behind the work
Offer financial wellness to the people at the heart of your business
September 20, 2018
None of these retirement events are out of the question, but they are not sure to happen either.
However, there are some completely terrible things that WILL likely happen during your retirement.
Here’s a look at some common catastrophes that can befall retirees and those nearing retirement.
But don’t worry too much. You will learn how to develop a retirement plan that can deal with these ruinous retirement events.
It is unsettling to think about. But, it is far more likely than not that either you or your spouse will die before the other.
The death of a spouse is a traumatic emotional event from a personal and family perspective. Beyond that it is a major financial event that can have grave consequences if proper planning is not done beforehand. This is especially the case if the deceased spouse was working and the primary breadwinner.
There are a few financial planning moves you can make to minimize the financial impact.
Plan Together: Make sure that both you and your spouse understand the details of your retirement plan and have a complete list of accounts, debts, income sources and more…
Make Sure You Have a Solid Estate Plan: In the wake of recent celebrity deaths, we have learned how common it is for people to have neglected estate planning. Prince, Aretha Franklin and Michael Jackson died without a will.
An estate plan can insure that your loved ones are cared for. A good estate planner or financial advisor will also help you maximize your wealth.
Check Beneficiary Designations: Ensure that all beneficiary designations on life insurance policies, annuities and retirement accounts like IRAs and 401(k)s are up-to-date. Beneficiary designations govern how these assets pass to heirs and they supersede any other directives like a will.
Be Smart About Social Security: If you have not already started Social Security, think carefully about when to begin benefits. One of the best strategies couples can use is to have the spouse with the highest benefit wait as long as possible, ideally until their benefit maxes out at age 70, to claim their benefits. This ensures that the surviving spouse will receive the highest possible benefit — the higher of their own benefit or a survivor’s benefit based upon their late spouse’s benefit. Learn more about the smartest Social Security decision you can make.
Consider Life Insurance: Life insurance can play a role in your retirement if one or both spouses is still working in retirement and/or the couple’s assets are not sufficient to ensure a financially secure retirement. The proceeds can supplement any retirement savings, Social Security benefits, a pension or other assets.
As we age we are more prone to a wide range of health issues. Some are annoying, but others can be serious, incapacitating and cause a change in our lives.
Like it or not, aging usually comes with some ailments. Here are a few things you can do to prevent and prepare for a health crisis:
Care for Your Health: Exercise, stay active and watch your diet. These actions can help maintain general health and potentially avoid serious ailments.
Disability Insurance: If you are relying on a retirement job for necessary income, disability insurance is a must. Coverage varies, but most group plans available through your employer will replace 60% or your normal salary. However, disability typically goes until you are eligible for Social Security retirement benefits. You can also file for Social Security disability benefits if disabled, but these can be difficult to quality for.
Good Medical Coverage: At 65 you qualify for Medicare. However, out of pocket health care costs can still be expensive. Signing up for a good supplemental plan can save you money in the long run. Just make sure you assess this coverage every year — the plans change and your health needs will evolve. Compare supplemental Medicare coverage options.
A Plan for Long Term Care: About 70% of of people who turn age 65 will need some type of long term care in their lifetime, according to the U.S. Department of Health and Human Services, but few are prepared to pay for that care. Medicare only provides very limited shorter term coverage. Long term care insurance policies vary in terms of cost, coverage and a multitude of other factors. But there are other ways to prepare for a long term care need: Explore 5 creative ways to fund long term care.
Health Savings Account: Another route while working is to fund a health savings account (HSA) while you are working if you have access to one. An HSA is a medical savings account that is available in conjunction with a high deductible health insurance plan. Your employer may offer this option or you can open one on your own if self-employed. The HSA allows you to contribute money for future medical expenses on a pre-tax basis, like a 401(k).
The money can be withdrawn to cover qualified medical expenses but can also be saved year-to-year. A great strategy for retirement is to pay your out of pocket medical expenses from other sources while working and let the money grow to cover medical expenses in retirement, including major, unexpected costs that may not be covered by Medicare or insurance.
One of the saddest and most reprehensible crimes is elder fraud or elder financial abuse. We read about this on a seemingly regular basis. This comes in many forms and the results can be devastating.
Data from the Investor Protection Trust Elder Fraud Survey reported that one in five Americans over 65 has been a victim of financial fraud and a 2011 MetLife Mature Market Institute study estimates that financial exploitation costs seniors at least $2.9 billion annually.
Be Alert: One of the best ways to combat this is to be diligent and careful. Protect your online passwords and don’t click on links in emails from people you don’t know. Don’t fall for scams like the IRS phone scam where you are told you need to send them money or provide personal information. The IRS never initiates contact by phone or email.
Know Who You Can Trust: As you age it is a good idea to involve adult children or other relatives in your finances. Know who to trust and grant them appropriate powers of attorney or other access to your affairs in the event that you become unable to manage things on your own. There are too many cases of a “trusted friend” coming into an older person’s life and stealing from them. Take appropriate steps while you are able to protect yourself as you age.
Report Suspicious Behavior: Think you have already experienced fraud? Find the right place to report the financial fraud.
Learn more about 6 critical ways you can protect yourself from fraud.
An all too common situation that many folks nearing retirement find themselves in these days is being forced into retirement before they are ready to retire. Companies will often downsize their employee ranks to save money, better align their workforce with their needs, etc.
Sometimes these layoffs are voluntary, at least at first. The company may offer an early retirement package with incentives like enhancements to the pension, extended medical coverage, etc. It’s often a good idea to “take the money and run” in these cases as you are likely now on their “list.” The next offer might not be so attractive and it might not be voluntary.
Illness is another reason that people are forced to retire earlier than they might have planned. Whatever the reason, the best way to deal with this is by being prepared.
Save More: If you are young enough, be aware that you might be forced into retirement before you are ready and use this knowledge to save diligently and invest wisely so that you are financially prepared should this occur.
The NewRetirement retirement planner makes it easy to try different scenarios. See how much you need for retirement if you are forced to retire earlier than expected.
Be Prepared to Transition to Another Job: Be prepared with a “plan B” if you want to and are able to continue to work. Network with others in your industry, perhaps another firm would value your expertise as an employee or a consultant. Many use retirement as an opportunity to do something they love not related to what they have done over the course of their career. Some start a winery, others teach, write or any number of other pursuits. Learn more about the benefits of career changes.
Update Plans and Adjust Spending: If you lose your job before you are ready, it is best to immediately take proactive steps to curtail spending.
We’ve all made a bad financial decision. Most of the time these are not financially devastating as with a relatively small investment in a stock that didn’t pan out.
However, sometimes we go all-in on something that doesn’t work out. Maybe it’s overpaying for a home, investing in a business venture that fails or falling victim to a smooth-talking scammer that convinces you to make a substantial investment into something that turns out to be nothing but a fraud.
Create an Investment Policy Statement: An Investment Policy Statement (IPS) will enable you to identify your investment philosophy and create a plan for staying the course. In other words, it can help prevent bad financial decision making.
Diversify: The best defense here is a good offense. Use good common sense and don’t put all of your eggs into one basket — diversify. That way a loss on one or two holdings won’t devastate you financially.
Get Professional Help: While using a financial advisor won’t protect you from all potential peril, they can usually help you avoid major disasters. Learn about the key to a successful relationship with an advisor.
Be Prepared to Adjust: Recovering from a major financial loss might require some adjustments to your retirement. You may need to scale back your lifestyle, work longer or return to work.
Yes. You read that right. Living a long time can be a terrible thing for your retirement plan. (Albeit a wonderful thing generally.)
While diminishing health can obviously hurt your retirement. Great health can also indeed be a threat to your retirement security. After all, the longer you live, the more risk you have of running out of money.
In the 1950s, people retiring at age 65 lived until 78. Today’s retirees can expect an average lifespan of 83 or 84 years – which means that half of you will live even much longer than that.
Guarantee Adequate Income: Guaranteeing lifetime income sources is the best way to hedge against living a long time. Social Security and most pensions are guaranteed for life. If those sources are not adequate to cover your necessary expenses, then you may want to consider a lifetime annuity or other ways to make sure your assets can be stretched for as long as you live — no matter how long that turns out to be.
For retirement security, you do need to plan for a long life. Find out what happens if you really do run out of money.
One of the most terrible retirement events is not something that happens, it is something that does not happen.
Did you know that just over half of all people approaching retirement have created a comprehensive written retirement plan? A study from Vanguard, found that only 55% of all pre retirees have calculated how much they need to retire and only 43% have thought about drawdowns and managing investments after retirement. Never mind all the other important details.
Another study found that most people spend less time planning retirement than they spend buying a television.
Retirement is a phase of life when you really need the best plan possible. You are not accumulating more resources, you need to make what you have work. And, a comprehensive retirement plan needs to address much more than investments. Social Security, how you want to spend your time, medical coverage and so much more are all part of a comprehensive plan.
Create a Plan Now: The NewRetirement retirement planner makes it easy to create a detailed and comprehensive plan. Setting up your account on NewRetirement takes about 5 minutes. Your information is always there. Make updates anytime you learn something new, want to try a different scenario, or when your lifestyle or finances change.
You deserve to feel confident about having a secure future.
Do it yourself retirement planning: easy, comprehensive, reliable
Take financial wellness into your own hands and do it yourself retirement planning: easy,
Share this post:
Our weekly newsletter full of inspiration, podcasts, trends and news.
© 2024 NewRetirement, Inc. All rights reserved.
Disclaimer: The content, calculators, and tools on NewRetirement.com are for informational and educational purposes
only and are not investment advice. They apply financial concepts in a general manner and include
hypotheticals based on information you provide. For retirement planning, you should consider other
assets, income, and investments such as equity in a home or savings accounts in addition to your
retirement savings in an IRA or qualified plan such as a 401(k). Among other things, NewRetirement
provides you with a way to estimate your future retirement income needs and assess the impact of
different scenarios on retirement income. NewRetirement Planner and PlannerPlus are tools that
individuals can use on their own behalf to help think through their future plans, but should not be
acted upon as a complete financial plan. We strongly recommend that you seek the advice of a financial
services professional who has a fiduciary relationship with you before making any type of investment or
significant financial decision. NewRetirement strives to keep its information and tools accurate and up
to date. The information presented is based on objective analysis, but it may not be the same that you
find on a particular financial institution, service provider or specific product's site. All content,
tools, financial products, calculations, estimates, forecasts, comparison shopping products and services
are presented without warranty.