Don’t Let These Surprises Derail Your Retirement

According to a recent Gallup study, many Americans don’t feel confident about their ability to fund a comfortable and enjoyable retirement. The annual survey about Americans’ financial concerns found that 54 percent of respondents are worried about retirement. That’s enough to make retirement the top financial concern for the 17th year in a row.1

Those concerns may be justified. Many Americans are behind on their retirement savings or haven’t sufficiently planned for potential risks. Even if you’ve accumulated enough assets for retirement, you could still face serious financial challenges after you leave the working world.

Below are three surprising things that could derail your retirement if you don’t plan properly. A comprehensive retirement plan can help you analyze these risks and more, and then implement a protection strategy. A financial professional can help you take action against these risks to protect your golden years.

A longer-than-expected life span.

There’s no doubt that people are living longer. According to the Centers for Disease Control and Prevention, a 65-year-old male in 1950 could expect to live another 12.8 years. By 2014 that number had increased to 18 years.2

At first glance, a long life expectancy may seem like a good thing. By living longer, you get to enjoy a longer retirement and spend more time with your family. However, a long life span can put a strain on your finances. The longer you live, the more years you may need to fund out of your personal savings.

There are a few ways you can minimize longevity risk. One is to make sure you’ve accumulated enough assets to fund a retirement that can last multiple decades. Another is to manage your spending so your assets last. You also may want to consider tools such as an annuity, which can generate guaranteed lifetime income.

Medical treatments not covered by Medicare.

Think Medicare will cover all your medical expenses? Think again. Medicare is a valuable resource for retirees, but it doesn’t pay for everything. There are many treatments that Medicare covers only partially or doesn’t cover at all.

That means you could face a significant amount of out-of-pocket health care costs in retirement. In fact, Fidelity estimates that the average 65-year-old couple will face $280,000 in out-of-pocket medical expenses. That figure doesn’t even include long-term care, which can be very costly.3

You can minimize exposure to health care costs by funding a health savings account (HSA). These accounts allow you to take tax-free distributions to pay for medical expenses. You also may want to consider a long-term care insurance policy to cover long-term care costs.

Too much free time.

Looking forward to a free and open schedule in retirement? You’re not alone. Free time is one of the most appealing aspects of retirement. However, many retirees soon find that they have too much free time on their hands. They may feel that they don’t have purpose or simply become bored.

The risk is that you fill your free time with costly activities such as travel, shopping or new hobbies. It’s important to enjoy retirement, but you don’t want to blow a hole in your budget in the early years of retirement. You can manage this risk by developing a budget and sticking to it. A financial professional can help you create your retirement budget.

Ready to minimize risk in your retirement? Let’s talk about it. Contact us today at Grand Canyon Planning Associates. We can help you analyze your needs and develop a strategy. Let’s connect soon and start the conversation.

1http://news.gallup.com/poll/210890/americans-financial-anxieties-ease-2017.aspx
2https://www.usatoday.com/story/money/columnist/powell/2016/10/05/life-expectancy-actuaries-live-die-retire-retirement/89407296/
3https://www.fidelity.com/viewpoints/personal-finance/plan-for-rising-health-care-costs

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17695 – 2018/5/30