Retirement Is Risky Business

Why Retirement Is Risky Businessgraph-963016_960_720

Are You Risking Your Retirement Years?

Retirement is risky, it’s a big life changer. As you get closer to retirement age you become more and more aware of that reality. Once retired you will not longer have a steady stream of income; your work based friendships may slowly fade away; you will have lots of empty time to fill and you may not be as healthy and fit as you were in your younger years. If you enter retirement unprepared for any of these changes in your life you may risk some good retirement years. Your retirement years should be priceless; but how can they be without enough money to support yourself, friends to spend time with, hobbies or activities to fill your time and a back up plan for health issues? Long before you retire closely examine your lifestyle and determine any gaps that may exist so you can head them off before you retire and they become overwhelming for you. A care-free retirement is the best kind. If you are unsure about where to start your review, read on to learn why retirement is risky and how you can change that.

Your Basic Retirement Risks

The Money Risk

We all know that retirement could last 25 years or more. Most people retire when they are in their 60’s and live into their mid 80’s. The length of time in retirement is not the risky part; the risky part is making your retirement income last as long as you do. Retirement truly is a balancing act and without meticulous financial preparation you risk running out of money. Why not financially prepare for your retirement as if you were getting graded on the outcome because you are and you cannot afford a failing grade.

Where To Start?

Start your financial preparation early in your career by using a retirement calculator. The best part about these calculators is that they give you an approximate financial target to aim for. Financial planners strongly suggest that you need at least 80% of your pre-retirement income for your retirement years. That percentage is a guesstimate; everyone’s financial situation is different. When calculating your financial need just be sure to pad the number for those unexpected, unknown expenses that you know will come up. You can never go wrong with saving too much, only too little. The whole point of planning, preparing and calculating your financial needs for your retirement years is so that you can enjoy those years not worry about your finances.

The Health Risksretirement is risky

You also do not want to worry about your health when you retire. Maintaining perfect health for 25 years or more is a bit idealistic for most of us though. Of course there are individuals who are lucky enough to beat the odds, but are you willing to bet on that?

The reality is that as we get older our health does tend to decline. But declining health is not the unknown or risky part; the unknown, risky part is facing financial ruin due to the devastating effects of an unexpected health issue or long-term illness. Most sicknesses or other health issues are usually covered by your health insurance. But a major expense often ignored by individuals until it’s too late is the cost of long-term illnesses. It won’t happen to me, I feel great or it’s covered under insurance are the typical reasons people give for not taking long-term illness serious enough to plan for. Congratulations if you feel healthy today, who knows what tomorrow will bring. If you happen to luck-out and develop a long-term illness will you be able to avoid financial ruin? Can you take that risk? The finances of many estates are depleted due to the devastating costs of long-term illnesses. This happens time and time again because people assume that their health insurance, Medicare or Medicaid will pay for all of their medical expenses.

Where To Start?

The best place to start if you are concerned about future unexpected long-term illnesses is to look into a long-term insurance policy.

Yes a lot of medical expenses could be covered by health insurance, Medicare or Medicaid during a long-term illness; but long-term care expenses are not. Long-term care expenses are only covered if you buy a separate long-term care insurance policy. So what is the difference between a long-term care expense and a medical expense covered by other insurance policies? A health insurance policy pays to get you better from an illness, injury or sickness with medicines, doctors, surgeries. Whereas a long-term care insurance policy would pay for your daily, routine living activities. A long-term care expense is defined as one of your 6 ADL’s (Activities of Daily Living). These ADL’s include bathing, dressing, eating, walking, toileting and continence. See the difference? One gets you back on your feet and the other keeps you going.

Most financial planners are familiar with long-term care insurance. Some planners are more knowledgeable than others because it is a specialty insurance. If you decide to purchase your policy through a financial planner interview them before making your purchase.

The Boredom Risks And Where To Start

Sometimes when people retire the life change is so extreme that they wish they had stayed working. They’ve never had so much idle time before and are not sure what to do with so much extra time. Don’t let that happen to you. Take the time before you retire to get to know yourself. Get to know what you like to do, what you’ve been putting off doing and who you want to spend time with. There are so many organizations that are looking for volunteers that you can have will not have a problem finding one that suits your interests. There are organizations that help challenged children to learn how to read or write; organizations that need help driving handicapped individuals around or volunteer groups at churches. The list of ways to spend your new-found time is endless, you just need to make the effort to match your interests with the right organization. Your talents and skills will go wasted if you do not reach out; make it happen, someone needs you.

It’s Your Time

Retirement is your time to do whatever you want to do. That sounds so perfect, but if unplanned for it can quickly turn into an unhappy, stressful time. Make the second 25 years of your life great by planning, organizing, calculating and preparing. That dream retirement you always wanted can happen, but it’s up to you to make it happen.



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