3 Common Retirement Emergencies and How to Manage Them

What will your sources of income be in retirement? If you’re like many retirees, you will depend on Social Security to an extent. You may be fortunate enough to have an employer pension. To cover any gaps, you will likely have to take distributions from your personal savings.

Even with these combined income sources and more, you still may find yourself living on a fairly tight budget. Many retirees are comfortable and are able to pursue their favorite activities, but they’re also only one unexpected cost away from being in a challenging financial position.

Unfortunately, emergencies do arise in retirement. If you haven’t planned ahead, those emergencies could break your budget and limit your ability to live a comfortable lifestyle. Below are three common retirement emergencies, as well as tips on how to manage them. If you haven’t planned for these emergencies, now may be the time to do so.

 

Home Repairs

Every homeowner knows how expensive a house can be to maintain. Something always needs fixed. Often, home ownership is a matter of deciding which repairs are urgent and which can be delayed.

In retirement, the challenge of maintaining your home could be more difficult because you might have limited income. Any withdrawal from savings may decrease the assets you have to pay bills late in life. You may be hesitant to tap into savings to replace the air conditioner or deal with the cracks in the foundation.

You can manage this challenge by building a substantial emergency reserve that is kept separate from your investments. Think of it as a safety nest for truly urgent needs.

You also may want to consider downsizing. A smaller home often translates into lower repair and maintenance bills. It could also save you money on taxes, utilities, insurance, and more.

 

Healthcare

Think Medicare covers everything in retirement? Think again. Traditionally, Medicare only covers hospitalizations and doctor’s office visits. Even then, it only covers a portion of the expenses. Your out-of-pocket portion doesn’t have a cap, so it could be substantial.

You can manage this expense by funding your health savings account (HSA), which can provide you with a tax-advantaged way to pay healthcare costs in retirement. Also, think about purchasing a supplemental Medicare Advantage policy that bundles traditional Medicare protection with additional coverage. Some policies may have caps on out-of-pocket costs.

 

Outliving Your Money

Everyone wants to live a long, happy life, so you may not think of living a long time as an emergency. However, it can be quite the challenge if you don’t have enough savings to fund that long lifespan. Near the end of your life, you may find it difficult to pay bills or fund needed care and assistance.

You can manage this risk by looking for ways to create retirement income streams that are guaranteed* for life. Annuities offer several methods for doing this, and some also have opportunities to grow your assets and your income.

Have you adequately planned for these risks? If not, let’s talk about. Hal Hammond in Sarasota welcomes the opportunity to help you analyze your needs and develop a strategy. Let’s connect today.

 

*Guarantees, including optional benefits, are backed by the claims-paying ability of the issuer, and may contain limitations, including surrender charges, which may affect policy values.

This information is designed to provide a general overview with regard to the subject matter covered and is not state specific. The authors, publisher and host are not providing legal, accounting or specific advice for your situation. By providing your information, you give consent to be contacted about the possible sale of an insurance or annuity product. This information has been provided by a Licensed Insurance Professional and does not necessarily represent the views of the presenting insurance professional. The statements and opinions expressed are those of the author and are subject to change at any time. All information is believed to be from reliable sources; however, presenting insurance professional makes no representation as to its completeness or accuracy. This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, accounting, legal, tax or investment advice.

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