Retirement is a time of transition, marked by the end of a long and successful career and the beginning of a new chapter. For many, it is a period of reflection and introspection, a time to pursue hobbies, travel, and spend time with loved ones. However, retirement can also bring unexpected challenges that can catch retirees off guard, especially when it comes to financial planning and healthcare.
As life expectancy increases and retirement periods become longer, retirees face the daunting task of ensuring that their savings and investments will last throughout their golden years. With market volatility, inflation, and the rising cost of healthcare, retirees must be diligent in their financial planning and investment strategies to ensure they can maintain their standard of living and achieve their retirement goals.
Here are five things you don’t expect in retirement and what to do about them.
#1 Health problems
One of the biggest challenges retirees face is declining health. During retirement, healthcare costs for a retired couple can exceed $200,000, according to the Center for Retirement Research at Boston College. That’s a significant expense that can quickly eat into retirement savings.
To prepare for potential health issues in retirement, investing in a good health insurance policy that covers major medical expenses is important. Consider supplemental insurance plans that cover dental, vision, and prescription drugs. It is also possible to prevent or manage health problems in retirement by maintaining a healthy lifestyle through regular exercise and a balanced diet.
#2 Boredom and loneliness
Retirement can be a major lifestyle change, and many retirees struggle to fill their newfound free time. Retirees can experience boredom and loneliness without the daily work structure, leading to depression and other health issues.
To combat boredom and loneliness, retirees should stay socially active by joining clubs or organizations that share their interests. Volunteering for local charities or community organizations is also a great way to stay engaged and give back. Retirees can also explore new hobbies, travel or pursue continuing education courses to keep their minds active and engaged.
#3 Market volatility
Retirees often rely on their retirement savings to provide a steady income stream during their golden years. However, market volatility can disrupt retirement plans and run the risk of retirees running out of money.
To protect against market volatility, consider the help of a financial advisor. Financial advisors can create a diversified investment portfolio that includes stocks, bonds, and other assets. Retirees should also consider adjusting their investment strategy as they age to reduce their risk exposure.
#4 Family obligations
Retirees may be called upon to support adult children or aging parents financially or emotionally. According to a report by Merrill Lynch and Age Wave, nearly two-thirds of retirees provide financial support to family members, and one-third provide ongoing caregiving support.
Managing family obligations in retirement requires setting clear boundaries and communicating openly with family members about financial and caregiving responsibilities. Retirees should also factor these obligations into their retirement budget to avoid dipping into savings.
# 5 Inflation
Inflation can erode the value of retirement savings over time, making it difficult for retirees to maintain their standard of living. Between 2010 and 2020, the average inflation rate was 1.8%, according to the Bureau of Labor Statistics. In 2021 the rate of inflation was 7 percent. Inflation seems likely to remain high for the next few years due to the war in Ukraine, several bank failures, and fears of a recession.
To protect against inflation, retirees should consider investing in assets that hedge against inflation, such as stocks, real estate, and commodities. Every year, retirees can adjust their retirement budget to account for inflation.
In conclusion, retirement is a time of great opportunity but can also present unexpected challenges. Retirees can enjoy a fulfilling and secure retirement by being proactive and preparing for potential challenges. Whether investing in a good health insurance policy, staying socially active, or diversifying their investment portfolio, retirees can take control of their retirement and make the most of their golden years.