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How To Prepare For The Unexpected In Retirement

Did you know that 56% of Americans lose sleep when they think about retirement?1

Yes, many people toss and turn over the unexpected “what ifs” of retirement:

What if I’m forced to retire early?
Unplanned early retirement is more common than you might think. According to one survey, 56% of retirees retired earlier than planned—mostly due to factors such as health issues or job loss.2 People who retire early may need to use money from their retirement fund sooner than planned to make ends meet. Losing employer-sponsored health benefits along with an increase in out-of-pocket health expenses can create further financial strain for early retirees.

What if I have a medical emergency?
Some retirees think their health care expenses will be covered once they’re 65. The reality is that Medicare doesn’t cover as much as you’d think. A couple who retired in 2018, will spend an estimated $280,000 on health care alone throughout retirement3—not including the cost of long-term care.

What if we outlive our savings?
Despite the fact that retirement age and longevity are essential factors to consider for any retirement plan, more than eight in ten (87%) middle-income Americans age 55 and older do not spend much time thinking about longevity.4  Americans are living longer lives—approximately one out of every three 65-year-olds today will live past age 90.5  A longer lifespan gives you more time to enjoy family, friends and the things you love to do. At the same time, longevity comes with a financial impact.

What if my parents need elderly care?
Today, approximately 10% of adults ages 60 to 69 whose parents are alive serve as caregivers.6 When you’re providing direct care for a parent, you’re more likely to pick up the tab for miscellaneous expenses such as nutritional supplements or a walker.

How to prepare for the unexpected “what ifs” of retirement

Do the “what ifs” above have you tossing and turning at night? Rest easier—and catch some peaceful Zzzs—by planning ahead for retirement.  Below, we’re going to share some helpful tips and advice to help you better prepare for retirement. First, we’ll share three easy steps to help you prepare for unexpected expenses in retirement, followed by six steps to help you create a retirement budget.

3 easy steps to help you prepare for unexpected expenses—and stay on track throughout retirement

Life can throw you a curveball sometimes. Whether it’s early retirement, medical expenses, living longer or caring for elderly family members, an unplanned life event can be a source of worry. It doesn’t have to be. Take control by planning ahead.

These three steps will help you prepare and budget for unexpected expenses.

  1. Establish a cash reserve

    Regardless of age, everyone should have an emergency fund to help cover expenses during a financial setback. Long-term investing is important but saving for an emergency fund should be your first priority. A good rule of thumb is to have enough cash set aside to cover three to six months of expenses.

  2. Maintain a well-diversified portfolio

    When you are younger, you may be able to afford to take more risk. As you age, however, it’s best to take a closer look at your investments and begin shifting your asset allocation to a more conservative portfolio. For example, an investor approaching retirement may want 25% of their investment to be in stocks and 75% in different types of fixed income. As you get closer to retirement, you need to manage your overall risk so you’re not overly exposed.

  3. Get a regular financial checkup

    Regular checkups with your representative are as important as your yearly physical! Meet and receive guidance and perspective about your portfolio, see if and where to make changes if needed, and stay on track. Your representative will help identify your retirement income goals, construct appropriate pathways to achieve them within your budget, and keep you on track.

6 steps to set a retirement budget

One of retirees’ biggest fears is running out of money, and yet less than half of Americans track their expenses and make a budget, according to a 2019 survey from the Certified Financial Planner.  Creating a budget can help you reduce stress by knowing you have a solid plan for keeping up with your financial responsibilities both before and during retirement.

These six steps will help you get started:

  1. Organize your financial records

    Gather your most recent year’s checkbook and credit card statements. Some people find that tax season is a perfect time to tackle this step.

  2. List your fixed monthly expenses

    Included in this category are rent payments, gym membership fees, cable bills, car payments and any other expense that is billed in the same amount every month.

  3. Calculate your monthly average for your variable expenses

    These costs are for regular bills that differ in amount month to month, such as grocery bills, utility bills, medical expenses and entertainment charges. Add up all your charges for a particular category in a year, then divide by 12 to get your average monthly expenditure.

  4. Estimate nonrecurring expenses

    Calculate how much you spend on occasional expenses, such as gifts or repairs, over the course of a year and divide by 12. If you’re planning on a special purchase for the upcoming year, estimate how much you’ll need to set aside.

  5. Compare your total expenses to your annual income

    How do they look? Ideally your expenditures will be less than or equal to your income over one year’s time. If you’re over budget, you can review where your money is going so that you can decide where you need to cut back. Alternatively, you can determine how much extra income you need to earn to make up the difference.

  6. Review your budget periodically and adjust if needed

    Make a habit of checking your budget anywhere from every month to once a year, depending on your comfort level. It’s easier to avoid financial trouble if you discover issues early and you’ll feel less anxiety if you can see that you’re on track month after month.

Don’t lose sleep tonight. Talk to a financial representative!

Don’t be one of the many retiring boomers who is losing sleep tonight from anxiety about retirement. A Bankers Life representative can help you explore your options and guide you through the challenges—so you can rest easier knowing you’re on track to reach your goals. Get started here.

1Cheatsheet, 15 Retirement Statistics That Will Scare the Crap Out of You, October 4, 2018
2Yahoo! Finance, The Big Problem with 56% of People Retiring Earlier Than They Expected, January 27, 2019
3CNN, Here’s How Much the Average Couple Will Spend on Health Care Costs in Retirement, April 19, 2018
4Bankers Life Center for a Secure Retirement, Bankers Life Center for a Secure Retirement, Longevity Risk and Retirement Income Planning for Middle-Income Americans, accessed 2019.
5Social Security Administration, Benefits Planner Life Expectancy, accessed 2019
6Kaiser Health News, A Late-Life Surprise: Taking Care Of Frail, Aging Parents, August 23, 2018


For information and educational purposes only. Does not constitute investment advice or a recommendation.

Bankers Life is the marketing brand of various affiliated companies of CNO Financial Group including, Bankers Life and Casualty Company, Bankers Life Securities, Inc., and Bankers Life Advisory Services, Inc.  Non-affiliated insurance products are offered through Bankers Life Securities General Agency, Inc. (dba BL General Insurance Agency, Inc., AK, AL, CA, NV, PA).

Securities and variable annuity products and services are offered by Bankers Life Securities, Inc. Member FINRA/SIPC, (dba BL Securities, Inc., AL, GA, IA, IL, MI, NV, PA).  Advisory products and services are offered by Bankers Life Advisory Services, Inc. SEC Registered Investment Adviser (dba BL Advisory Services, Inc., AL, GA, IA, MT, NV, PA). Home Office: 111 East Wacker Drive, Suite 1900, Chicago, IL 60601  Bankers Life Securities Customer Call Center: (844) 553-9083

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