Three Unexpected Risks to Your Retirement Plan

By Ash Toumayants, founder of Strong Tower Associates

Most of us do what we can to prepare for a secure retirement. We try to save enough money, we invest in a diversified portfolio, and we plan for big expenses like healthcare in retirement. But what about the unexpected risks to your retirement plan?

As a financial advisor, I’ve seen dozens of people get caught off guard by risks they should have considered. Have you prepared for the things outside of your control that may affect your plan? Here are three common yet unexpected reasons your retirement plan could fail.

1. Forced Early Retirement

As you accumulate wealth and build your retirement savings, there is always a risk that your career could end prematurely due to poor health, disability, a job loss, or to care for a family member. Early retirement can destroy even well-laid retirement plans. Especially for high earners, the loss of income during the final years of their career can spell financial disaster.

Being forced into retirement early is more common than you may think. The Employee Benefits Research Institute data shows that 47% of retirees stopped working earlier than they had planned. Working fewer years than expected can also decrease your Social Security benefits during retirement.

To protect against this risk, you must have adequate disability insurance to protect your income in the event of an illness or disability. If you are laid off, do not take a severance offer until you speak with someone who can help evaluate what your company has offered and negotiate on your behalf.

2. Premature Loss of a Spouse

Losing your spouse is devastating, but losing a spouse during the final years of their career can be dangerous for the surviving spouse’s financial plan. Furthermore, retirement and long-term care costs may increase without a spouse to share costs and provide care.

It’s critical to involve both spouses in the planning process and consider benefits for the surviving spouse. Life insurance may be a solution, with some companies selling first-to-die policies that could protect against this risk. Wills, trusts, and beneficiary designations must be reviewed to ensure both spouses are protected financially. Finally, you will want to create a pension and Social Security strategy to optimize the benefit for the surviving spouse.

3. Health Care Costs that Drain Your Nest Egg

According to the Employee Benefits Research Institute, the average couple will need between $151,000 and $350,000 for healthcare in retirement. Without your employer’s insurance, adequate coverage may be harder to find. Even with Medicare, there may be significant out-of-pocket expenses and conditions and treatments that aren’t covered.

When selecting your health insurance for retirement, it’s important to work with an experienced professional to choose the best plan. Understanding all Medicare options and supplements will help you evaluate your choices.

If you need help preparing for the unexpected to protect your retirement plan, call us at 814-325-9806 or email