If you’re concerned about your ability to retire comfortably, you’re not alone. According to a recent Gallup survey about financial worries, more than 60 percent of Americans said they were concerned about not having enough money to retire. In fact, retirement has ranked as the No. 1 worry for 16 consecutive years.1
For many Americans, there is an obvious solution to a retirement savings shortfall. They can simply plan to work past retirement age. By working longer, you give yourself more years to save, and you reduce the number of retirement years that may have to be funded by withdrawals from your savings. You also may be able to delay Social Security, which could increase your benefit.
However, working longer may not be a feasible strategy for many people. In fact, it’s possible that you may be forced into retirement earlier than you would like. If that happens, you’ll need a backup plan, such as reduced spending or perhaps downsizing your home. Even if you plan on working well into your 60s or 70s, you may want to save as if you will retire early.
Not convinced that you could be forced into retirement? Review the three scenarios below. They’re fairly common, and they could end your career before you’re ready.
According to the Council for Disability Awareness, 25 percent of American adults will become disabled at some point in their life.2 There is also the possibility that your risk of disability increases with age. The Centers for Disease Control and Prevention estimates that more than 60 percent of Americans age 65 and older have a limitation on at least one basic function of daily living.3
If you’re disabled and unable to work, you may have to retire earlier than you would like. You can minimize the financial risk of disability by purchasing disability insurance or by saving enough assets to fund an early retirement.
The U.S. Department of Health and Human Services estimates that 70 percent of all 65-year-olds will require long-term care because of a loss of basic functions.4 They may need help with eating, dressing, bathing or a range of other activities. This care is often provided in the home or in a facility.
Clearly, if your health deteriorates to the point that you need long-term care, you won’t be able to work. However, what if you remain healthy but your spouse needs care? Would you be able to hire in-home help? Or would you have to leave your career to care for your spouse?
Again, this risk can be mitigated through the use of insurance. Long-term care insurance can help cover either in-home or facility services.
Finally, even if you remain healthy, there is always the risk of job loss through termination or downsizing. The economy can change quickly. Years from now, your employer could face challenges that aren’t easy to predict today. If those challenges force your employer to downsize, your retirement plans could be at risk.
Again, an effective way to manage this threat is to have a contingency plan in place. Save for retirement as if you’re going to retire early. Think of ways you could downsize and cut back in the event of an early termination. Then, even if you do work late into your golden years, you will still have a sizable nest egg available.
Are you concerned that your retirement saving efforts are lacking? Let’s talk about it. Contact us today at Sprouse Financial Group. We can help you analyze your needs and develop a strategy.
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