Unexpected Threats to a Well-Planned Retirement

How to Stay On-Track When Unforeseen Challenges Arise

It’s a scary feeling. You’ve planned carefully, saved appropriately, invested thoughtfully and are on track to retire. Then you are met with a significant and unexpected financial challenge. How do you stay on track?

Many families rely on the crucial years before retirement – a time when peak earnings can be socked away to fund retirement and eliminate any remaining debt. What happens when a major life event or financial hardship interrupts your plans?

Following are five unexpected events that can all be made easier by having the framework of a financial plan in place. We’ll look at the potential impact of each, and offer steps to minimize the damage and get back on track to meet your retirement goals.

Threat No. 1: Job Loss

In an era of globalization and change, it is not uncommon for companies to be acquired, downsize or go bankrupt, all of which can lead to jobs being eliminated without much notice. Even well-paid senior employees can find themselves out of a job when they are least expecting to start over professionally.

Others may find themselves having to opt out of the working world by choice earlier than expected due a serious illness or injury that makes maintaining a regular work schedule difficult.

Facing a job disruption in your 50s or early 60s when you’re only a few years away from retirement means more than just lost income. It can mean reduced retirement savings, earlier-than-expected withdrawals and hampered progress toward paying down debt. To minimize the disruption, and prevent having to tap savings or take on more debt, it is important to have several months of living expenses set aside in a savings account. If you’re married and your spouse works, you may decide jointly that it makes sense for them to work a bit longer to help replace the lost income.

If you do plan to return to work after a job loss or taking a leave to deal with medical issues, be realistic about those prospects and keep a flexible mindset. You may need to be open to accepting a position that isn’t at the same level as your previous role and may not pay as well, which ultimately may mean working later in life than you had initially planned. Those who are unable to secure another position may need to consider reducing expenses such as downsizing to a smaller home or moving to a less expensive area. In any event, you will want to do the financial planning upfront to ensure you have options if the process takes longer than expected or doesn’t go as you had hoped.


Watch for Threat #2 next month…..

©2017 Robert W. Baird & Co. Incorporated. Member NYSE & SIPC. Robert W. Baird 3/2017

Article provided by Rebecca Ross, Vice President and Financial Advisor at Robert W. Baird & Co., member SIPC.  She has 32 years of financial services industry experience, and can be reached at 239-541-9090 or rross@rwbaird.com.  www.rwbaird.com