Avoid Retirement Derailers: Plan for Events that Affect Savings

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By Bennett Whitlock, CRPC

Private Wealth Advisor

A recent survey conducted by Ameriprise Financial Services, Inc., of people ages 50 to 70, showed that 90 percent of respondents have experienced some economic or life event that negatively impacted their retirement savings goals.

These included low-interest rates, lessened home equity and having to support an adult child. The average respondent experienced four such events. In the end, these retirement “derailers” set respondents back an average of $117,000.

Ways to protect your retirement from unexpected derailers:

  • Save early and often. Calculate what you think you’ll need for retirement and if possible, save even more than that. Consider putting bonuses or tax returns into retirement savings, and increase contributions to your employer-sponsored retirement plan as you near retirement. If you’re nearing retirement and coming up short, determine how you may spend less and save or perhaps work longer.
  • Maintain an emergency fund. Expenses for unexpected events such as auto repair or illness are inevitable, but you can prepare by factoring them into your financial plan and keeping extra cash on hand. Only 33 percent of respondents are extremely or very confident they can afford such an expense in retirement. Beat the odds by setting aside extra money for potential bumps in the road.
  • Purchase the right kind and amount of insurance. Only half of respondents who experienced the death of a spouse or a disability had adequate insurance coverage to maintain their lifestyle. Consider disability, life and long-term care possibilities and be thorough in doing your homework before choosing the kind and amount of coverage. Also determine a plan to cover healthcare costs if you plan to retire before you’re eligible for Medicare coverage.
  • Develop a written plan. According to the survey, those who say they have had a smooth road to retirement are more likely to have written financial plans in place than those who characterize their journey as bumpy (65 percent versus 55 percent).

Careful planning and diligent saving can help you to beat retirement derailers and enjoy a secure future.

Bennett Whitlock, CRPC, (bennett.c.whitlock@ampf.com) is a private wealth advisor and managing director with Whitlock Wealth Management, a local franchise of American Financial Services, Inc. He specializes in fee-based financial planning and asset management strategies.


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