Retirement plot twists

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Even if you've spent decades smartly saving and carefully planning for the future, there are still some unexpected twists that could throw your finances—and life—for a loop. When certain life events happen in retirement, they can quickly cut into your savings and leave you trying to replace the income you had planned to last throughout retirement. The good news is you can be proactive now to be financially prepped for the unexpected later. While there's no predicting the future, these three common situations could alter your course in retirement. Here's how to be prepared.

1. You or your partner has a health scare

Your employer health insurance or Medicare may not cover all the costs that can pile up with a serious illness or disability that could affect your family’s future. According to a recent cost of care survey, an assisted living facility costs an average of $4,500 per month and a home health aide averages to over $5,000 per month. 

Your move now: During your working years, take a good, hard look at your family's health history. If you suspect you or your spouse is at a higher risk of developing a chronic or serious condition, it can be beneficial to start an emergency fund for long-term healthcare costs. Take time to review your health coverage and understand what Medicare will and will not cover. Someone turning age 65 today has nearly a 70 percent chance of requiring some type of long-term care services in their later years, so it’s better to be overly prepared, than not at all. Before you enter retirement, you may want to explore your options for purchasing insurance that can help offset the cost of long-term care.


2. Your spouse passes away

If you suddenly lose your spouse, it not only can upturn your vision and plans for the future, but you may also be left to live on a single income. While death can be a difficult subject to discuss, it’s necessary to plan for such an event to ensure the financial future of the person left behind is secure and they can continue to maintain their quality of life without worrying about making ends meet.

Your move now: Make sure your accounts are organized and that you both have a firm grip on the working parts of your finances. Encourage each other to have equal participation in your financial planning and understanding the sources of retirement income, including Social Security, pensions, 401(k)s, annuities and other savings vehicles. It's also a good idea to review your life insurance policies to ensure coverage still meets your needs and that you’ve identified your beneficiaries. You will want to select beneficiaries for your retirement savings accounts as well. If you do not have a will in place, take time to create one to make sure your finances are in order and your wishes will be fulfilled. Connect with a trusted financial professional regularly and make sure your accounts or investments are in order, particularly after life changes or if there are changes in your retirement timeline.  


3. Your family needs you

Many people who are in or nearing retirement end up caring for their aging parents, which can greatly affect their retirement savings. A study by AARP and the National Alliance for Caregiving found that half of caregivers say they used their own money for household-related expenses and 30 percent covered rent or mortgage payments for their loved ones. You may also end up financially supporting adult children or caring for your grandchildren for a variety of reasons. Without proper planning, your savings can be quickly depleted and you may not have enough income to last throughout retirement.

Your move now: If you feel you may need to assist your parents, have conversations with them as soon as possible. Even though this can sometimes be challenging, it’s important to get a handle of their finances well before they need care. Having a financial professional help guide this conversation can be beneficial and assist families where financial discussions may be problematic. When looking at different savings options, ask yourself if there is anyone you may someday need to financially support. You can ease the potential financial burden by setting funds aside in advance for that purpose, either through a trust or other investment vehicles.


Remember that your retirement is still your top priority, so don’t lose sight of your own financial goals. Taking action today can help you navigate potential twists and turns with more resilience and ensure that the life you pictured as a retiree will still be waiting for you when that next chapter arrives. If you need help creating a sound financial plan that will help keep your retirement goals on track, feel free to connect with a financial professional who can offer valuable insight and guidance.

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