Is Your Retirement Plan Ready For Unexpected Financial Events?
Unexpected events happen in life. They happen to young people. They also happen to old people. Many who are heading into retirement might feel they have a strong plan to deal with the unexpected. However, it's important to analyze whether this is actually true.
Have an Emergency Fund
Most personal finance experts argue that it's important to have between three and six months of expenses stashed away in an emergency fund. A few advise holding nine or 12 months of expenses in cash to deal with emergencies. This is even more important for those who are heading into retirement. Those who are relatively young and employed are in the accumulation phase. An emergency fund is important, but these folks are less likely to draw from their stash. They are more likely to add to it.
Once retirement hits, people start to withdraw their nest eggs. Suppose the market is down when they start making withdrawals, the likelihood of running out of money increases. Therefore, it's a good idea to have a year or two of cash available, both for emergencies and to deal with the possibility that a down market will hit.
With the exception of those who have millions stashed away for their golden years, it's important for retirees to have life insurance. A good insurance policy can take care of funeral expenses and any other end-of-life costs. These expenses will likely include medical care, which can be very expensive.
Use Survivor's Benefits
Those who are married will want to ensure their spouses are taken care of should they precede them in death. Many pension plans offer an option to continue payments to the surviving spouse. Those who take advantage will wind up with a lower monthly payment to help provide for the survivor's benefit. However, taking a small hit will be worth it for the spouses of those who die six months after they retire.
Planning for the future is important for people who are nearing retirement age. Taking care of loved ones with insurance or survivor's benefits is important. Like those in earlier stages of life, retirees will also want to have an emergency fund available. Taking these steps can greatly help retirees ensure they and their families are able to deal with the unexpected.
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