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3 Surprises That Can Derail Your Retirement Plans


July 05,16 | 12:00 am

“The best-laid plans of mice and men…” – you know the rest. No matter how well you’ve prepared for your well-deserved retirement, there’s always the chance that unexpected events can arise, forcing you to rethink the next 5, 10, or 20 years of your life.

How can you insulate yourself from the risks associated with these events?

The first, and perhaps most important, thing to do is to keep an open mind. If you’ve gotten to retirement age in the first place, you already know that nothing in life is certain – at least, you know it better now than you did at 22, even if you haven’t fully embraced the truth of the statement.

Keeping this in mind as you plan your retirement will help you maintain your emotional health. This is important because, unfortunately, the newly retired often experience feelings of depression, stress, and irritability for the first few weeks or months of their post-work life.

When it comes to your finances, however, there are certain things you can do to lessen the impact of major unexpected events on your retirement.

Supporting adult children – or a new one

Often, once your kids leave the nest they don’t fly back home again. However, the 2008 recession and its aftermath have resulted in an increase in the number of adult children who need to come back and live with their parents, whether for a few months or a few years.

This has remained true even as the economy has recovered. In many ways, it can be wonderful to have your children at home again; however, as you know all too well, kids tend to put a bit of a strain on your finances, no matter how old they are.

Other than refusing to allow your children to live with you, which you probably don’t want to do, the best way to prepare yourself for this possibility is to talk with your children openly – and tactfully – about your financial situation, as well as theirs.

Unexpected medical costs

Predicting the medical costs you may need to cover is a nearly impossible task, as charges vary wildly depending on a host of factors.

However, one thing you can count on is that you will almost certainly need some kind of serious medical care between now and when you die. That could be as simple as treatment for a broken bone or as complex as long-term care in a nursing home.

The best way to lessen the probability of incurring major medical costs is to maintain a healthy lifestyle and commit to preventive care. It’s also important to learn what Medicare will and won’t cover, so you won’t be hit by completely unexpected expenses if you do end up in the hospital.

Another method many people use to cover the costs of long-term care or major medical expenses is to sell their unneeded life insurance on the Secondary Market in a life settlement.

They then receive a lump sum payment for the policy that is usually many times higher than the cash surrender value, although lower than the death benefit. If you’re considering lapsing your insurance, you may want to discuss the life settlement option with your financial advisor.

Loss of a spouse through divorce or death

The loss of a spouse, whether through divorce or death, is a serious emotional blow that has major, sometimes lifetime, effects on a person’s life. Unfortunately, it can also have a serious effect on a person’s finances.

While divorce among couples in their 50s or 60s is less common than among those in their 20s and 30s, it does happen. The financial consequences of divorce are severe: According to a 2006 study by Ohio State University, divorce causes each person to lose an average of three-fourths of their accumulated wealth.

This can be especially devastating when a couple is close to retirement. The newly divorced may find themselves having to dip into their retirement funds more frequently than they’d planned, and less able to save for the future.

A life settlement can be useful in this situation too – if you decide you no longer need your life insurance to provide for your ex-spouse after your death, it may make more sense to sell it on the Secondary Market than to allow it to lapse. 

In the case of a spouse’s death, if that person was the primary breadwinner, the surviving spouse can be put in a difficult financial position.

One excellent way to protect your spouse, in case you should die before him or her, is to devote some time to estate planning together. Then you’ll both know the state of your finances, and what to expect when the inevitable does occur.

There are plenty of unforeseen events that can derail your carefully laid retirement plans, but you can do things to lessen their potential impact on your finances. If you think a life settlement might be the right choice for you, ask your financial advisor to contact Ashar today.

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