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10 Retirement Derailers

Wednesday, May 29, 2013 - 8:28 AM
From Bankrate:
You've done retirement planning right.

You're between ages 50 and 70, and you have more than $100,000 in investable assets. At this point, retirement should be smooth sailing -- right?

Not so fast. According to an Ameriprise Financial study of people who met the above criteria, 90 percent say they have already encountered at least one "retirement derailer" that cost them an average of $117,000 in savings.

Here are the most common derailers and the percentage of people who experienced them.

Read more

Not surprisingly, low interest rates was the most frequent derailer experienced.  What could the participants have done differently?  Again, not surprisingly, start saving earlier.
9
pearlbrownpearlbrown1,431 posts since
Nov 2, 2010
Rep Points: 6,248
1. Wednesday, May 29, 2013 - 9:26 AM
The biggest reason for derailment which is not mentioned is encountering health issues.  Due to some health related issues my father had to be admitted to a nursing home last year.  The cost is around $120K plus per year which also includes dialysis three times a week. Between pension and social security my parents income was about $45k per year so were comfortable in their retirement and had money in the bank to sustain them.  The nursing home cost would wipe them out in a few years if we did not transfer all his assets into my mother’s name so he would be eligible for Medicaid.
9
FARFAR106 posts since
Feb 26, 2013
Rep Points: 381
2. Wednesday, May 29, 2013 - 9:39 AM
Re: FAR @ 1. Wednesday, May 29, 2013 - 9:26 AM

Excellent point. One's retirement planning can go up in smoke if a significant "health issue" comes into play. Some people, that can afford the premiums, opt to carry a long term care (LTC) policy. It's getting harder to find insurance companies that will write a LTC policy these days and it's beneficial to apply for one while in the mid-50s age bracket.
10
ShorebreakShorebreak2,604 posts since
Apr 6, 2010
Rep Points: 14,109
3. Wednesday, May 29, 2013 - 9:58 AM
FAR, sorry to hear about your parents' situation.  You're right that an unexpected major health issue can wreak havoc on finances.  It sounds like you have now been initiated into the intricacies of Medicaid.  Ideally your parents' assets remaining can last until the Medicaid look-back period (which is now 5 years) has passed.  You may already be familiar with past related discussions on this forum, but just in case.... Could you get stuck with your parent's nursing home bill?  may be worth reviewing.  Good luck to you and your family.
8
pearlbrownpearlbrown1,431 posts since
Nov 2, 2010
Rep Points: 6,248
4. Wednesday, May 29, 2013 - 12:49 PM
 

Thanks for the input. Yes, I got a crash course on eldercare law and the experience enlightened me for my own planning. Problem is who knows what current health care laws will be in effect in 20-30 years. The first hurdle was to get my parents onboard with Medicaid. They always lived within their means and never wanted to be a burden.  The first mention of Medicaid and they were adamantly against it stating it was for poor people that never saved so there was that stigma they had to overcome. Finally got them to admit there was no other option for the long term. We ended up getting everything transferred into my mother’s name and her liquid assets under $100k (not including house, car or possessions). The lawyer put everything else went into an annuity which pays her a monthly income.  So far it has worked as planned.

 
6
FARFAR106 posts since
Feb 26, 2013
Rep Points: 381
5. Wednesday, May 29, 2013 - 4:31 PM
On the financial factors (low interest rate and market losses due to recession or worse), one really needs to spend some time learning about investing and understanding the economy/market trends.

After the 2000 bubble and the subsequent bear market, I decided to invest my time and energy on investing and manging my retirement portfolio.  Think about, the retirement portfolio is the largest financiala asset for most people.  Why should we trust this asset to random market directions and gamble-like investing?

Thus my advice is to start learning and start accumulating as early as possible.  This endeavor should be your main line of business.
2
51hh51hh1,476 posts since
Jan 16, 2010
Rep Points: 6,426
6. Wednesday, May 29, 2013 - 8:01 PM
Re: 51hh @ 5. Wednesday, May 29, 2013 - 4:31 PM

"This endeavor should be your main line of business."

Most working people are too busy raising a family and paying bills. Unfortunately they have to rely on financial advisors to guide them on the process.  That's just the reality of the situation.
6
ShorebreakShorebreak2,604 posts since
Apr 6, 2010
Rep Points: 14,109
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