You probably see yourself with saved a million dollars for retirement traveling around the world or playing golf when you retire. But if financial problems appear, these dreams will not translate into reality.
You cannot always be able to prevent yourself from a financial disaster. But it is always possible to get prepared for a rainy day. Let us review all the situations that can ditch your retirement plans and the measures to deal with them.
Your Kids Move Back Home
If your kids move back, it will destroy your plans for retirement. If you have to help your adult children financially, give them money for groceries and utilities for a long time, you can deprive of all your retirement savings really fast.
It is vital to set boundaries if your children ask for financial help. It is a good idea to establish basic rules that concern the time of assisting your child/children. It is especially important if you have a mortgage or any other debt, that should be repaid.
You Suddenly Get Sick
When people get older, they often have to deal with major illnesses and health problems. If you have Medicare or other coverage, it will help you pay less for healthcare expenses. But there is no insurance that covers each and every healthcare cost.
Besides trying your best to maintain your health, you can make some more things to prevent your retirement savings from draining. For instance, if you are still working, you can fund your health savings account (HSA). When retiring, you can withdraw these savings without paying taxes for them.
If you are already retired, you can compensate your healthcare expenses by purchasing illness-specific coverage or supplemental insurance policy. Maybe you will have to use your retirement funds to cover the premiums. But this option is truly worth considering.
Your Spouse is in Need of Long-Term Medical Care
Genworth Financial reports, that the private nursing home for a month costs $7,698. If a nursing facility is obedient for your spouse, you should think where to get money, because Medicare doesn’t cover long-term nursing home stays.
The only way to keep out of paying for nursing home care independently is to get long-term care insurance. Its premiums may be quite high. However, it may be the only option, if your spouse does not qualify for Medicaid.
Your Savings Are not Enough
At Personal Money Service, we often hear: “I need money desperately“. If you have not saved enough money when you worked, you might have to reduce your expenses to live a hand-to-mouth existence. Or you can search for the possibilities of supplying your retirement income.
SocialSecurity is not the program to guarantee 100% safety. Yet, your benefit check size will get 8% higher for every year that you lay aside collecting your payments. If you can take it slow when taking Social Security, you will have more money for the retirement period.
Unpredicted Early Retirement
Medicare program is available for people 65+. So if you get laid off before this age, you will have to pay all the medical bills from your own pocket. It can be an enormous sum. If a couple retires before the age of 65, may have to pay $15,000 or even more to get appropriate medical coverage. These unexpected, huge bills may havoc your retirement savings much faster than you think.
Unawareness of your fees
Face the truth: you need to be aware of where you spend your money. Mutual funds or broker commissions – keep tabs of all your expenses.
To do this, you may consult your adviser or search the new one.
You can purchase a mutual fund with a lower internal expense ratio.
Repairing Your House After a Natural Disaster
The place you live can be potentially dangerous because of natural disasters. The East Coast is prone to floods and hurricanes. West Coast has may be dangerous because of wildfires.
If your home is not secured, you may have to pay the damages out of your own pocket. Or a deductible of your insurance is too high. It can take money out of your retirement reserve fund. Get to know the most and least expensive cities in the USA.
Losing a Part-time Job
Maybe you would like to be partly employed during retirement. It is the perfect solution for those, who stay proactive and healthy when they are 65+. But an unexpected change of your cognitive or physical abilities can put this type of job to an end. In such a case you will have no money to pay the bills. So it is better to think about the retirement age when you are younger.
It is impossible to avoid emergencies. Thus, everyone should plan the finances ahead. If you know how to deal with certain crises, it will lower down the risk of a poor retirement period.