Don’t Derail Your Retirement Plans
Submitted by Wealth Management Services Group LLC on April 25th, 2017Every retirement plan is based on a certain number of assumptions. You can’t predict the future, so you have to make assumptions about certain factors, such as your spending in retirement, how long you will live, your health and more.
One of the biggest assumptions is the age at which you will retire. At first glance, this may not seem like an assumption at all. After all, you may believe that you will be the one choosing when you stop working.
Many workers assume they can overcome gaps in their retirement savings by simply choosing to work longer. They believe that by delaying retirement, they can contribute more to their savings and eliminate a few years of retirement that would otherwise have to be funded by their assets.
In fact, Transamerica found in a recent study that two-thirds of baby boomers plan on working past age 65. And 15 percent of baby boomers said they don’t plan on retiring at all. Of those who plan on working past age 65, two-thirds said they were doing so because of financial necessity.1
However, the assumption that you can work as late in life as you want may not be correct. The Employee Benefit Research Institute found that 46 percent of retirees were forced to retire earlier in life than they’d wanted.2
Why would they be forced to retire early? There are a variety of reasons. And if you don’t have contingency plans in place, your retirement could be derailed. Below are a few common reasons why people are forced to retire early:
Disability
Don’t think you could ever become disabled? Think again. According to the Council for Disability Awareness, 1 in 4 adults in America will suffer a long-term disability at some point in their career. American workers on average think they have a 2 percent or less probability of becoming disabled. The reality is that they have a 25 percent chance of suffering a disability.3
There are a wide range of medical issues that could force you to leave your career. Everything from injuries to cancer to heart conditions to cognitive diseases and more could be enough to prevent you from working.
To minimize this risk, you may want to look into disability insurance, which can provide an income-replacement benefit to help you overcome financial challenges. Also consider building an emergency reserve fund that you could tap into should you become physically unable to work.
Job Loss
What would happen if your employer went through a restructuring and eliminated your position? Could you survive on unemployment benefits? Would you be able to find another position? Or would you have to tap into your retirement assets?
Even if a layoff or other form of job loss doesn’t seem likely today, that doesn’t mean it can’t happen in the future. Business conditions can change quickly, and even seemingly stable employers make job cuts all the time. Create a backup nest egg that you could use if you found yourself out of work, and also consider investing in training and education that make you more valuable to your employer.
Family Needs
Many retirees are forced out of their careers not by their own issues but, rather, by the challenges faced by their family members. For example, you may have an elderly parent who develops health issues that require round-the-clock care. Would you be able to provide care for your parent and still maintain your career?
The same question applies to a spouse, child, grandchild or other loved one. Any number of potential family issues or health challenges could limit your availability to work or force you to consider early retirement. Think about how you might be able to support yourself should you choose to exit the workforce early.
Do you have a plan for early retirement? If not, let’s talk about it. Contact us at WMS Group. We can help you analyze your risks and develop a strategy. Let’s connect today and start the conversation.
2https://www.ebri.org/files/RCS_16.FS-2_Expects1.pdf
3http://www.disabilitycanhappen.org/chances_disability/disability_stats.asp
Licensed Insurance Professional. This information is designed to provide a general overview with regard to the subject matter covered and is not state specific. The authors, publisher and host are not providing legal, accounting or specific advice for your situation. By providing your information, you give consent to be contacted about the possible sale of an insurance or annuity product. This information has been provided by a Licensed Insurance Professional and does not necessarily represent the views of the presenting insurance professional. The statements and opinions expressed are those of the author and are subject to change at any time. All information is believed to be from reliable sources; however, presenting insurance professional makes no representation as to its completeness or accuracy. This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, accounting, legal, tax or investment advice.
16532 - 2017/3/22
