Don’t Ignore These Dangers to Your Retirement, Ep #193

Are you confident your retirement plan is built to last-or could there be a trap door waiting to open beneath your feet? In this episode, I shine a light on the hidden dangers that can derail your retirement. Have you ever considered what would happen if your pension were suddenly cut in half? It has happened to retirees from major companies before, and it could happen again.

I delve into real-life stories of people who thought they were financially secure, only to be blindsided by risks they hadn’t seen coming. From unexpected inflation spikes (like a 27% jump in homeowners insurance) to concentrated investment risk in company stock, I explore about a dozen real threats that could jeopardize your financial future.

And let’s not forget the myth of “guaranteed” part-time work or inheritance that didn’t happen; these are shaky assumptions that can crumble when life takes an unexpected turn. Too many people are flying solo, handling their retirement plans without a “copilot”, only to find themselves overwhelmed when tragedy strikes or a spouse becomes ill.

I also caution listeners about locking up most of their savings in complex products like annuities or whole life insurance without fully understanding the rules, restrictions, or penalties. But you don’t have to manage your planning alone. We offer free resources and a company willing to help you navigate these pitfalls.

So, what’s your plan if the unexpected happens? Are you prepared, or are you just hoping for the best? It’s time to step back, assess your risks, and patch the cracks in your retirement foundation before it’s too late.

You will want to hear this episode if you are interested in…

  • (00:00) Intro.
  • (05:11) How a pension is a threat to your retirement.
  • (07:34) How the cost of living and inflation affect retirement.
  • (09:15) Concentrated investments like company stocks threat to your planning.
  • (12:15) What assumed incomes could be a threat to your future funds?
  • (15:34) Should life insurance policies and annuities be avoided?
  • (17:44) Are you vulnerable to key-person risk? How we can help.

Identifying Common Retirement Threats

Over the years, I’ve seen a wide range of risks that can threaten a person’s financial future in retirement. Some of the most common include over-reliance on pensions, unexpected inflation spikes, layoffs late in your career, and health events that change everything. For example, I’ve worked with retirees who had their pensions suddenly cut in half due to underfunding or corporate bankruptcy.

Others have been hit hard by cost-of-living increases, like insurance premiums rising 27% in one year. These situations are often out of your control, but your ability to prepare for them isn’t.

Investment Risks and False Assumptions

Another huge threat I often see is having too much money concentrated in a single investment, like company stock. It feels great when the stock is up, but if it crashes, it could delay or destroy your retirement timeline. Similarly, many people make optimistic assumptions, like counting on future inheritances or part-time work after retirement.

The truth is, inheritances can shrink or disappear due to long-term care costs, and job opportunities in retirement may not always be there. These assumptions can create a false sense of security and leave you scrambling later.

Emotional Preparedness and Oversights

One major risk that often goes overlooked is the emotional and logistical burden placed on one spouse when the other is no longer able to manage the finances. I’ve worked with clients who suddenly became the sole financial decision-maker after a partner fell ill, and they felt overwhelmed and unprepared.

There is a risk in only having one person, especially when they aren’t you, knowing and managing the financial aspects of your life. If you are looking for a partner in your finances, we’re here to help. Another avoidable risk is blindly purchasing complex financial products, like annuities or whole life insurance, without understanding how they actually work.

I’m not against these products, but they need to be thoroughly understood, not just sold. Check out our episode 187 to learn all about annuities. Ultimately, retirement success depends on recognizing these potential “trap doors” and being willing to plan with awareness.

 

Resources & People Mentioned

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