Despite all our efforts at planning every aspect of retirement many years in advance, there are certain types of financial emergencies that can arise during retirement, and if we haven’t planned accordingly, then the consequences could be devastating. Remember that most of us will cut back or stop working entirely during retirement, so our retirement income is likely to be far less than what we were making when we were full-time workers.
Fortunately, there are steps we can take to lessen the negative impacts of these retirement emergencies. Here are five of the most common types to be aware of, and steps that you can take to guard against them.
Medical Emergencies. Medical emergencies are likely to be the single biggest category of significant expense that anyone will face during retirement. Even with the availability of Medicare, the medical issues that arise later in life are more likely to be ongoing and more expensive than medical issues when we were younger.
The best way to plan for these emergencies is to avoid them in the first place by keeping ourselves healthy and fit throughout our adult lives. In addition, as we age it becomes more important to spend the extra money for more comprehensive health insurance coverage, and to make adequate coverage a top financial priority.
Family Emergencies. Financial emergencies might not arise only with respect to you or your spouse. Your children or grandchildren may encounter situations in which you feel that it’s necessary for you to assist. You might address the financial implications of these types of family emergencies by boosting the size of your own emergency fund, or perhaps even setting up a separate fund (which you may or may not choose to tell your relatives about) that you can have available to help if circumstances arise.
Damage to Your Home. While the numbers are decreasing, many retirees still have paying off their home mortgage as a primary goal before entering retirement. This can be a great financial benefit, but there are some consequences to keep in mind. The first is that when you no longer have a mortgage, you’re not contractually required to have adequate homeowners insurance.
Unfortunately, this means that any significant damage to your home runs the risk of costing you significant amounts out-of-pocket if your insurance coverage is lacking. You can plan for this contingency by reviewing your homeowner’s policy each year and making sure you have enough coverage.
Car Repair. Many retirees rely heavily on their automobiles to keep them independent and healthy. An unexpected car repair bill, or damage to the car that’s not covered by insurance, can greatly impact your retiree’s quality of life. Guard against this possibility by making sure your emergency fund is adequate, and maintaining sufficient insurance coverage on your vehicle.
Death of a Spouse. The death of a spouse can sometimes trigger financial emergencies, in addition to the overwhelming sense of emotional loss. For example, if your spouse was still working but you’re retired, then the loss of income can be significant. Make sure each of you have adequate life insurance until you know it’s no longer necessary.
Retirement can be a great facet of the person’s life, provided that they saved enough, and are guarding against the common financial emergencies that can arise.
Tags: retirement advice, retirement planning, saving for retirement
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on Tuesday, March 3rd, 2015 at 3:34 pm and is filed under Planning.
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Despite all our efforts at planning every aspect of retirement many years in advance, there are certain types of financial emergencies that can arise during retirement, and if we haven’t planned accordingly, then the consequences could be devastating. Remember that most of us will cut back or stop working entirely during retirement, so our retirement income is likely to be far less than what we were making when we were full-time workers.
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