Life usually disrupts retirement planning
Most people spend very little, if any, time planning for their eventual retirement. Others put away money, but do not run any calculations to see if their current savings is reasonable for the lifestyle they want to be able to keep up in the future. But some plan and save quite adequately for their retirement.
Then something happens.
When that something can be anticipated, a solution is to insure the potential problem away. A potential disability can be managed through disability insurance. The premature death of a spouse can be handled through life insurance. You get the picture: Most big financial hits to your wallet can be planned for and insured. But many can’t.
For instance, a lot of folks in this country have experienced long-term unemployment. While financial planning includes an emergency fund to get over temporary unemployment, and the government has unemployment insurance, none of this would have been enough to get through 2-3 years of un- or underemployment that many have seen.
Sometimes it is a health issue. While the Affordable Care Act has helped many, it can’t deal with every possibility. If your loved one cannot be cured and could die without an experimental treatment that no insurance program will cover, where will that money come from? I don’t know about you, but my retirement savings would not be enough to cover it.
And then there are the problems that do not originate with you, but that you find yourself responsible for anyway. Adult children and their kids’ problems might show up at your door (sometimes quite literally). Maybe it is a situation that was beyond their control. Maybe it was poor planning. Or maybe they just screwed up. But in any case you may see your retirement savings drift away in order to fix the problem (Is this a good or bad idea? I’ll let your own soul-searching determine that).
It’s not just the children. Sometimes roles reverse and you find yourself needing to prop up your parents. Yes, they should have gotten that insurance, but they didn’t and now they need help. Or one of you has to quite your job to care for parents, jeopardizing all the planning you had done.
And then there is divorce. What was going to be a comfortable retirement for a couple now becomes a nightmare for one or both.
There are about as many ways a good plan can run into trouble that are, quite frankly, not your fault. Stuff happens. Because of that I thought we’d look a little at how to handle it. But as there are many problem, situations, and people, this will be a discussion that has a lot of generalities. Those generalities will not fit in this column so you’ll have to come back next week.
This article was published under the title "Best-laid plans to retire may go awry" in the Wichita Falls Times Record News on December 21, 2014.