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How to Avoid Retirement Disaster

How to Avoid Retirement Disaster

You may not enjoy planning but if you ever want to retire, you absolutely must do at least some planning before you start living on savings that won’t be replenished. During retirement, everyone needs to follow some money rules if they don’t want to end up in a very difficult situation. If you’re one of those people who don’t like to plan there are certain rules that state what not to do if you want to retire without running out of money. People must think of strategies which will help them to succeed in retirement by avoiding financial disaster. In life unexpected things can occur like the roof needs replacing, daughter needs financial help, tax expenses, other miscellaneous expenses etc. When we are working, have a job that helps us to meet these outcomes. It also helps us to set aside some money for retirement. These savings will help us to meet the unexpected expenses at the time of our retirement.

Conservative planning

Optimistic planning for retirement helps us to take care of future of emergencies. That’s because optimistic plans are subject not only to the uncertain events but also to investment failures. There are financial events like the remaining life of your vehicle or air conditioner, repainting the house, downsizing your home etc. better retirement planning will help you in meeting these expenses in future years. If you fail to plan for your retirement then it might create problem in future, so it’s better to invest your money in certain retirement plans.

 

Debt obligations can be destructive

When income falls due to loss of a job or the person is unable to work or dies there is no income left to make the debt payments. Income doesn’t always follow our projections for the future. The result may mean loss of our home or future earnings. Many are finding that outstanding student loans can follow them through life. Any remaining balance on a student loan may affect future earnings. So it’s better to be earning interest than paying it. This is only possible if we live below our means.

 

Insurance can help

Uncertain things can be covered by insurance. The greatest unknowns in retirement are how long we will live and what long term care will cost us. Social Security is fantastic insurance for a long life, and those who have savings enough to delay Social Security benefits gain more each year of delay plus an inflation kicker on that every year. Even after death, the surviving spouse gets 100% of the payments of whichever spouse’s Social Security was larger. In general, you must be over 40 years of age to purchase such insurance.

 

Emergency reserves

There are some unforeseen events that will occur at some time or another, particularly in retirement. For e.g. A close friend’s son died at age 35 leaving a non-working wife, three young children, and a newly purchased house. This puts enormous pressure on the dead son’s retired parents for financial assistance. And so it is for a daughter with children that gets divorced. That’s why we need emergency reserves to provide at least some help. There are older people who do part-time work to increase their savings. Some go to children for help; some go to their church or food-bank for relief.

The main point of all of this is to encourage people to plan conservatively, reduce debts, give serious consideration to long-term-care insurance, think hard about an emergency reserve and start setting some money aside.

 

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