Retirement is a time for relaxation and enjoying the fruits of your labor—or is it?
According to the latest Prudential retiree survey, 55-year-old Americans are woefully unprepared for retirement and have median retirement savings of just $55,000. And if their retirement is upended by an unexpected event, they're in real trouble.
From job loss to health crises, there are many events that can mean you'll be forced to retire early. Here's how you can prepare and safeguard your retirement plans against the unexpected.
Earn cash back on everyday purchases with this rare account
Want to earn cash back on your everyday purchases without using a credit card? With the Discover®️ Cashback Debit Checking account (member FDIC), you can earn 1% cash back on up to $3,000 in debit card purchases each month!1 <p>See website for details.</p>
With no credit check to apply and no monthly fees to worry about, you can earn nearly passive income on purchases you’re making anyway — up to an extra $360 a year!
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Build up an emergency fund
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Experts recommend setting aside at least three- to six months' worth of living expenses in a separate account for emergencies.
This fund works as a buffer against job loss, unexpected medical bills, or home repairs that could otherwise force you to dip into your retirement savings.
The reason to keep it separate is so that you aren't tempted to spend it on things that are not a true emergency.
Apply for unemployment
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If your company suddenly downsizes or you're unexpectedly laid off near your retirement date, don't hesitate to apply for unemployment benefits. Unemployment benefits can take time to process, so applying as soon as possible is recommended.
While these benefits won't equal your previous wages, they can provide income support during this transition period.
Find affordable health care
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Health care costs can make up a large portion of your expenses during retirement. The average couple will need over $300,000 to cover medical expenses during retirement.
If you retire before becoming eligible for Medicare at age 65, you have options. You may qualify for COBRA coverage from a former employer or private health insurance plans through the healthcare.gov marketplace.
If you’re over 50, take advantage of massive discounts and financial resources
Over 50? Join AARP today — because if you’re not a member you could be missing out on huge perks. When you start your membership today, you can get discounts on things like travel, meal deliveries, eyeglasses, prescriptions that aren’t covered by insurance and more.
How to become a member today:
- Go here, select your free gift, and click “Join Today”
- Create your account (important!) by answering a few simple questions
- Start enjoying your discounts and perks!
You’ll also get insider info on social security, job listings, caregiving, and retirement planning. And you’ll get access to AARP’s Fraud Watch Network to help you protect your money, as well as tools to help you plan for retirement.
Important: Start your membership by creating an account here and filling in all of the information (Do not skip this step!) Doing so will allow you to take up 25% off your AARP membership, making it just $15 the first year with auto-renewal.
Review investments
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Some people take a hands-off approach to investing. They select a target fund for their investment portfolio and leave it be.
As you approach retirement, review your investment portfolio to ensure it aligns with your risk tolerance and current retirement timeline. Consider diversifying across asset classes to reduce your risk level as you approach retirement.
Consider an annuity
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An annuity is an investment product that can offer a stable source of cash flow during retirement. You pay an insurance company upfront, and in return, the company provides income for the remainder of your life.
There are different types of annuities, and most of them can be tailored to your specific financial needs.
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Delay taking Social Security
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You can start receiving Social Security benefits as early as age 62. However, delaying until your full retirement age — typically between 66 and 67, depending on your birth year — can significantly increase your monthly benefits.
If you can wait until age 70, you will reach the maximum benefit amount, which is 130.7%. This strategy can provide you with more cash flow during your retirement years.
There are exceptions to this recommendation, such as if your life expectancy is below the average or if you're unable to pay your monthly bills without going into debt.
Make extra money
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Adding cash to your monthly income can help reduce stress when you're preparing for an unexpected retirement. Look at part-time work, freelancing, consulting gigs, or turning hobbies into income streams to supplement your retirement savings.
Generating additional income benefits you before retirement and may also provide a sense of fulfillment as you transition into retirement.
Plan your retirement spending
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Most adults spend 20% to 30% less than they did while working. This figure should help you estimate your retirement income needs and create a budget. You'll say goodbye to commuting, work attire, and other costs.
Don't forget, though, that during retirement, you may increase your spending on things like health care or hobbies. Make sure to account for your changing needs and priorities over the next few years.
Downsize your home
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Your housing is often one of your biggest expenses. Downsizing your home could help reduce your cost of living.
You may also save time and money on cleaning, yard care, and utilities. If you've already paid off your mortgage and don't want to move, you may be able to access the equity in your home through a HELOC or reverse mortgage.
In 2023 Americans lost over $10 billion to identity theft and fraud
That's right. According to the FTC, Americans lost over $10 Billion to fraud and identity theft in 2023.
But you can safeguard your data with all-in-one identity theft protection services from Aura which comes with $1,000,000.00 in identity theft insurance2 <p>Identity Theft Insurance underwritten by insurance company subsidiaries or affiliates of American International Group‚ Inc. The description herein is a summary and intended for informational purposes only and does not include all terms‚ conditions and exclusions of the policies described. Please refer to the actual policies for terms‚ conditions‚ and exclusions of coverage. Coverage may not be available in all jurisdictions.</p> per adult, to cover you should you have eligible identity theft-related losses.
An individual plan starts at $9 per month, and you can choose a family plan that outmatches most others - includes Dark Web monitoring to scour data breaches and leaks for your sensitive personal data — such as Social Security numbers (SSN), Medicare information, and phone numbers.
Before you make your next online purchase, protect what you’ve built for a fraction of what it could cost you if your data were compromised.
Find a new hobby
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Hobbies are great for staying active during your golden years. Unfortunately, common retirement activities like playing golf or traveling can come with a hefty price tag.
If you're looking to conserve your retirement funds, explore new, less expensive hobbies like gardening, playing chess, or joining a local walking group. New hobbies are also a great way to stave off loneliness and make new friends.
Bottom line
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Even if your retirement date is coming up soon, there is still plenty of time to make extra money to pad your savings or prepare for an unexpected layoff.
Many people find working with a financial advisor helpful for retirement planning. A fee-only financial advisor can analyze your investments, suggest tax-efficient ways to withdraw from your retirement savings, and help you develop an estate plan.
Preparing ahead of time means that you'll be able to enjoy your retirement whenever it comes — whether it's unexpected or not.
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Earn 1% cash back on up to $3,000 in debit card purchases each month.1 <p>See website for details.</p> No minimum deposit or balance. FDIC Insured.
Become a member and enjoy discounts on things like travel, meal deliveries, eyeglasses, and more.
Helps to identify and prevent fraud in real-time with 24/7 U.S.-based support.
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