Living on a fixed income is tough enough as it is without unexpected surprises. Regardless, life is often unpredictable, and it’s best to be prepared for the worst.
Here are a few financial issues you should be aware of that can, unfortunately, arise in retirement.
1. Declining Markets
A bear market can be a scary prospect if you’re heavily invested in stocks. The last thing you want to do is end up selling off a bunch of your investments though. It’s even worse if you’re in your early years of retirement, too.
Make sure you have enough cash in the bank or a money market fund to sustain yourself for a couple of years. This way you can pay your bills without needing to sell securities.
2. Medical Issues
First of all, if you retire before 65, whatever you do, don’t get rid of your health insurance. Even later on when you join Medicare, a major illness or accident can be financially draining.
Medical problems can and often do arise in old age, so it’s best to prepare yourself financially just in case.
3. Nursing Home Care
One of the biggest risks to your nest egg is you or your spouse requiring assisted living or long-term care. If you or your spouse spend any significant amount of time in this situation, it can seriously drain your finances.
If you can afford it, consider investing in long-term care insurance. Even if you have to go with a barebones policy, it’s better than nothing. If you find that illness is looming, you’ll want to immediately rethink your financial plans.
Many of us have lofty ideals for our retirement plans. We want to see the world, invest in our dreams, and not worry about working to pay the bills.
However, retirement isn’t always so glamorous and stretching yourself too thin is a very real thing that can happen. Always keep a budget so you’ll know when and/or if you need to start scaling back.