3 LIFE-CHANGING EVENTS THAT CAN BUST RETIREMENT PLANS
We all dream of reaping the fruits of our hard work, as well as enjoying the freedom of doing things at our own pace upon reaching the golden years. But there are some life events that can affect our retirement plans, lifestyle, and quality of life. While these occurrences are inevitable, we can brace ourselves for these possibilities and counter its effects.
Spouse’s Death / Catastrophic Illness
For those with fateful disease, secure a health insurance coverage especially as retirement age draws near. Medical expenses can strip away retirement savings very quickly and easily. Or, obtain a disability-income insurance, designed to safeguard one’s earning capacity before retirement. This will continue paying an amount close to an individual’s salary in the event of disability and can no longer work.
It is also ideal to purchase sufficient life insurance to shoulder the funeral costs of a spouse. Through the years, funeral expenses have increased, which can severely dent the survivor’s fixed income.
How can we prepare for this?
Secure assets through trusts and thoroughly preparing the will ahead of time. Seek professional help for medical payment and tax management.
Should the spouse pass away, the caregiver or survivor must take steps to sustain himself/herself. Certain health or mourning support groups can assist the spouse of those afflicted with certain catastrophic illness or suffering from the loss by offering support on services, coping, and financial assistance.
Having and nurturing a circle of friends is also beneficial for you and at any stage in life. So it is important to have the same support system during the major changes accompanying retirement. You may live near your loved ones to alleviate the effects of spousal loss or illness. But when you decide to do so, make sure it is also near the medical facilities. That way, it can cut the costs of in-home services, therapy, and transportation, as well as the time and effort exerted in utilizing these services.
Many couples forego a properly framed prenuptial agreement, which can provide the best protection for your retirement. In essence, a prenup agreement outlines and set aside assets not jointly owned.
If you can agree on a fair and equitable division of assets, a non-contested division of assets between you and your future ex-spouse can be really cost effective. If successful, both of you will obtain more assets unlike when you contest the division and let the courts settle it. Subjecting the divorce to professional legal and financial advice from divorce experts won’t help in keeping the quality of your retirement.
Discussing this matter with children at all ages may avert many potential relationship and financial problems that might ruin retirement years. It is also important to prepare your circle of friends for this process in order to retain friendships into retirement. Your friends will appreciate it if you include and inform them, and they will likely help you overcome your situation.
So can we counter or lessen the outcome of divorce? We can, more or less.
Once the divorce is imminent, securing assets the soonest time possible, and using professional legal and financial advice is crucial in preserving retirement assets. Although it is difficult to achieve, it is still possible for both parties to broker a property-division agreement following a divorce decision.
Even though you are in the middle of this turmoil, update your will, transfer-on-death designations for savings and retirement accounts, life insurance policy, and the like. In the event of unexpected divorce, you should counsel your children. Keep the communication lines open for discussion.
Work hard on this or put your retirement at risk.
Loss of Income
There are various steps a person can take to ensure the retirement is still intact. One can refinance home mortgage at longer repayment terms in order to cut monthly payments and stretch cash reserves. An individual must also set aside six months’ worth of living expenses in the bank for emergency purposes.
Do not lose connection with industry contacts, especially if you want to work again. Keep monthly expenses low and cut nonessential costs. A person can also consider changing the stock portfolio to income stocks from growth stocks. He may also sell unnecessary property and equipment to gain cash for savings.
Can we recover from this?
Definitely. The first thing to do is to downsize lifestyle. Gain additional income from new endeavors and conserve cash. An individual can consider reverse mortgage to gain monthly cash from old home equity. Worst comes to worst, go back to part-time or full-time work.
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