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.

Last month we looked at Threat #2, this month we look at Threat #3.

Threat No. 3: Getting a Divorce

Similar to the death of a spouse, a late-life divorce can be even more devastating from a financial perspective. While no one expects to divorce in their 50s, there is very little that can be done to prepare for it. Divorce generally cuts assets right down the middle while nearly doubling expenses.

It’s important not to waste any time in rewriting your financial plan and getting back on track. Align yourself with a team of experts you trust including an attorney and financial advisor who can help you traverse the complex decisions you will face. You will want to take advantage of catch up contributions on 401(k) and individual retirement accounts that allow those over age 50 to save more. If you were married longer than 10 years, consider applying for 50% of your ex-spouse’s Social Security benefit if it is larger than your own.

The reality is that in most cases both spouses will need to reduce expenses in order to live within their means. As difficult as it might be, you may find that keeping the same home you’ve had all these years may no longer be affordable, so be prepared to adjust to a new housing situation.

Watch for Threat #4 next month…..

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

Rebecca A. Ross, Vice President, The Ross Group, 239 541-9090, rross@rwbaird.com