Retirement risks

What you don’t know may cost you in retirement

Retirement is complicated and what you don’t know (or think you know) can cost you. Here are a few common beliefs that might lead you astray:

Betting on early death If you die early in 1 retirement, your worries about paying for it are over. Live longer, though, and you easily could outlive your money.

However, you may live longer than you think. The average U.S. life expectancy is just under 79, but that’s from birth. If you make it to 65, you can expect to live another 20 years or so. People with healthy lifestyles and more education tend to live longer than average.

2 Ignoring your spouse When one spouse dies, one of the couple’s two Social Security checks goes away. The survivor has to get by on the larger of the two checks. It’s important to maximize this survivor benefit by having the higher earner delay filing for Social Security as long as possible.

3 Carrying debt If you’re wealthy, having debt may not be a big deal — you have plenty of income to make the payments and your investments may be earning more than you’re paying in interest. If you’re not rich though, you may be pulling too much from your savings to service the debt. That could increase the chances you’ll run out of money.

4 Overlooking long-term care If there’s anything people like to ponder less than death, it’s decrepitude. Yet someone turning 65 today has a 70% chance in the future of needing help with daily living tasks, such as bathing, eating or dressing.

Family and friends may help, but about half will incur costs for long-term care. And 15% will incur costs of $250,000 or more. Long-term care insurance may be one solution, or you may want to earmark certain funds for this.

5 Assuming you can work

longer About half of retirees report leaving the workforce earlier than they had planned. Often this is because they lose their jobs and can’t find replacements or because of ill health (their own or a loved one’s). Working longer can help you make up for not saving enough, but it’s not an option you can count on.

Putting off retirement With all this gloom and doom, 6 there are people who err too far to the side of caution. Time, good health and energy are all finite resources. Spend a few hundred bucks of your hard-earned savings on a fee-only financial planner — and find out if it's time to start living the future you've been saving for.