When creating a plan for retirement, you likely accounted for various risks that could interfere with your goals. It's crucial to be prepared for any potential obstacles that may cross your path. While your financial plan is designed to sustain you through market volatility, there are a wide range of frequently overlooked risks that need to be taken into account as well.
Nothing happens in a vacuum. When unexpected life events occur, they often cause a ripple effect, leading to a host of financial consequences down the road. To prepare for these challenges, it's important to take them into consideration when designing your financial plan. This kind of proactive thinking is essential to risk management in retirement.
There are three main expense areas that people tend to underestimate once they approach retirement. Here's an overview of each area, as well as some tips on how to take action.
A common mistake many people make is underestimating the true cost of medical expenses for themselves and their spouses. Instead of relying on Medicare to cover everything, because it won’t, it's important to be prepared to pay for at least some of your health care costs. Your Medicare costs can be calculated based on your income, but that does not necessarily include your retirement income. Be sure to keep this in mind when planning for retirement.
Another mistake that can harm your retirement plan is miscalculating the costs of long-term care. These costs are on the rise and more of us will have to pay them because we’re living longer lives, making them a critical part of any financial plan. If either you or your spouse stays at a nursing home, you should already have set money aside for the anticipated expenses. Ask yourself if you've considered insurance and other possible options to prepare for this important aspect of risk management in retirement.
"What happens to my spouse’s Social Security when they die?"
"If my spouse dies, do I get their retirement benefits?"
Now is a good time to acquaint yourself with the rules and guidelines of Social Security. An early death in retirement impacts Social Security as well as other benefits that are left with the surviving spouse. How much have you budgeted as income for your retirement? This number may not stay the same, so remember to prepare yourself for any changes down the road.
Risk management in retirement is a task best handled with a reliable financial advisor. With help from this skilled and experienced expert, you can craft a strong financial plan that is regularly maintained and adjusted to accommodate for life changes and market volatility. Contact us today to find out how we can help you build a solid plan for the future.