In Your 50s? Don’t Forget About These 3 Surprising Retirement Risks
Here at Vitucci & Associates, we see a lot of clients in their 50s. Some are talking to an advisor for the first time in their lives, and others have been with us for years. Many are looking ahead to retirement with concern about making the right plans to improve their financial security.
As we always say, one of the key values of an advisor is in the fact that no two situations are exactly the same. What works well for one person might not meet the needs of another, and financial advice is only useful if it can be applied effectively to your situation.
However, there are certain patterns that we see in our practice – and certain risks that often get forgotten about. These three risks might seem obvious when you read them, but they’re all too easy to overlook when you’re worried about retirement plan contributions, investment planning, and your child’s college tuition
The good news is that by taking time to learn about them, you can act to do something about them. There’s no time like the present – so let’s get started.
- Your spouse’s views on retirement
If you’re married, you’ve probably had more than one conversation around money – maybe even regularly.
But don’t assume that you’re on the same page about retirement.
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A 2015 survey of couples found that 72% considered themselves to communicate “exceptionally or very well” about their finances. But 43% couldn’t correctly state how much their partner earns – and 10% of those were off by over $25,000.
This basic lack of knowledge was just the tip of the iceberg: the study found numerous surprising miscommunications about retirement among couples.
For example, half of couples weren’t sure how much they’d need to maintain their lifestyle in retirement, and half disagreed on the estimates that each partner provided.
A third of couples disagreed on what their retirement lifestyle would even be.
If you haven’t talked through these issues with your spouse, now is the time to start the conversation. With a clear idea of what you have – and what you want – as a couple, you’ll be better positioned to develop a clear plan for the coming decades.
- Your job security
Whether you’ve enjoyed a lifelong career in a stable industry or you made a late career change to a new and exciting field, job security is a question that should be top of mind if you’re in your mid-50s.
That’s because losing your job now is riskier than losing your job at 25 – and it’s a risk that you should acknowledge even if you’re one of the 41% of baby boomers who have been with the same employer for more than 20 years.
How can you mitigate this risk?
- Keep up to date: Make sure you’re staying on top of trends in your industry and any new skills or tools that can help you excel at your work.
- Keep networking: Depending on your role and industry, meeting and staying in touch with people in your field could give you more options should you need to shift gears or change employers in the future.
- Stay involved: While you might feel like you’re through with office politics, you could still put your hand up for new responsibilities, committees, or projects. Staying involved could help you maintain visibility professionally (and, well, politically), build credentials for any sudden career changes, and simply keep your day more interesting.
- Stick with saving: As we see our retirement balances grow, there’s a temptation to slack off on saving and enjoy other things – try not to give in. Between the importance of your 50s from a savings perspective and the potential tax benefits of additional contributions, taking advantage of your workplace retirement plan (and your income) is generally a good idea.
The steps you can take to build job security and future employability will depend on any number of factors, but hopefully these ideas help you get started.
At this point in life, it can be hard to stay focused on career, but doing so could mean the difference between a smooth transition to retirement and a scary one.
- Your health
What would happen if you developed a debilitating illness at age 58?
Or experienced declining energy and ability for work over the coming decade?
Health issues don’t just impact our quality of life, they can cause unexpected changes to our retirement plans – and those changes can have a financial impact that lasts for decades. Whether you have an existing illness or are healthy as a horse, managing your health should be a top priority for your retirement plan.
Of course, there are many forces outside our control when it comes to medical issues. But there are steps you can take to stay relatively strong and healthy. After all, the leading cause of death in the US is heart disease – which in many people is largely preventable.
For example, you could:
- Quit smoking. It’s a no-brainer for a reason: smoking doesn’t just cause damage today, it increases your risk for numerous other medical problems later in life.
- Get moving. Exercise is good for the mind and the body – it’s getting started that’s the hard part. Whether it’s roping a buddy into that morning run or taking a new class at the gym, try to find ways to keep active that are interesting, engaging, and fulfilling. You’ll be more likely to stick with it – and to reap the benefits.
- Eat right. The basics are typically the same for most any “healthy diet.” More vegetables, less junk food. See if you can add more veggies to your life as a starting point, and work up from there.
The hard part with health is that you have to work on it every day, and the benefits are often invisible. If you’ve never had emphysema it’s difficult to recognize how great life is without it. That’s why it can help to look for ways to live a healthy lifestyle that’s also fun, satisfying, and even delicious.
On the other side of the coin, don’t forget to include your health surprises in your retirement plan. Consider stress testing your savings plan to see what would happen if you needed to retire early or pay out-of-pocket for a significant or chronic health problem. This two-pronged approach to planning can help you avoid the fallout from both “lifestyle” and unexpected health problems more effectively.
Ready to put your retirement plan to the test?
Do you want to find out if your retirement plans are as robust as you think? Our free retirement stress test guide can help. It’ll show you – clearly and in plain English – how to test your retirement readiness on multiple levels, and how to adapt your plan to reduce your exposure to key risks and surprises.
Download our free retirement stress test guide today!
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