Sunday, November 15, 2015

5 Common Financial Emergencies That Can Appear Without Warning During Retirement

Life often brings surprises and even with planning there are circumstances that occur which can change things dramatically. Such is the case even with retirement. People often plan every aspect of retirement years in advance but there are certain financial emergencies that occur, and if one hasn't planned accordingly the results can be devastating. 

Most people will either cut back or stop working entirely when on retirement, so their income is likely to be less than it was when working full-time. Fortunately, there are ways to minimize impact of these financial emergencies that occur. 

Here are five of the common financial emergencies that occur during retirement and the ways you can protect yourself.

Car Repair

For anyone, a car can bring unexpected emergencies in the form of damage that's not covered by insurance or a bill for unexpected car repair. Many retirees have a heavy reliance on their vehicles. 

You can guard against this emergency possibility making sure you have an adequate emergency fund and keeping your vehicle sufficiently insured.

Medical Emergencies

Medical emergencies are likely to be the single biggest category of emergency expenses that anyone will face while in retirement. Even with Medicare available, the medical issues that tend to arrive in later life are more likely to be ongoing and incurring more expenses than the medical issues we experienced when we were younger. 

The best way to plan against such medical emergencies is to avoid them in the first place by keeping ourselves healthy and in good shape throughout our adult lives. In addition to living a healthy lifestyle, it's important to make adequate insurance coverage a top financial priority as we age.

Damage To Your Home

Many retirees have a primary goal of paying off their home mortgage before entering retirement. While this can be financially beneficial, there are some consequences to keep in mind. The first is that you're not contractually required to have adequate insurance for your home when you no longer have a mortgage. 

The unfortunate result of this is that any significant damage to your home can cause you significant out-of-pocket costs if your insurance coverage is lacking. To plan for this scenario, review your homeowners policy each year and make sure you have enough coverage.

Family Emergencies

Financial emergencies may not only rise between you or your spouse. There may be situations that occur to your children or grandchildren where you feel it is necessary for you to assist. 

You might increase the size of your own emergency fund to address the types of implications these family emergencies bring, or you perhaps even set up a separate fund (one which you may choose not to disclose to your relatives) that you can have when such family emergencies arise.

Death of a Spouse

The death of a spouse can be tragic enough in itself. It can also sometimes trigger financial emergencies, which add on to the already overwhelming sense of emotional loss. 

For example, if you were retired but your spouse was still working, then the loss of income can be significant. To minimize the financial strain when this emergency occurs, make sure each of you have adequate life insurance until you're sure it's no longer needed.

Retirement can be a great part of your life, provided that you plan and save enough, adequately guarding against potential emergencies that can arise in life. These common emergencies can happen to anyone so it's best to be prepared. You never know when you'll have to write a check for a repair or a bill unexpectedly.

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