Most emergencies in life affect us financially. Job loss, serious illness, injury, a major necessary home repair, or perhaps a needed repair to your vehicle – any of these can be costly. There’s also the risk of a natural disaster. We have clients in many states – and we know that several have experienced hurricanes, flooding, tornadoes, mudslides, wildfires, and major blizzards.
Coping with all these emergencies requires two things; and that is ’money’ and ‘planning’. Adequate insurance is certainly part of the planning process, but insurance only helps with some of the possible emergencies we’ve mentioned. Many other emergencies require us to rely on other financial resources, and handling life’s unexpected events without accumulating excessive debt or draining your savings can be a daunting task.
We understand that throughout our adult lives, covering daily expenses is a basic concern while dealing with whatever emergency has come up. This is true while when working and still true during retirement.
Make Smart Moves to Cover Unexpected Emergencies After Retirement
Having an emergency fund is always important. For young workers, the first goal for an emergency fund is 3 to 6 months of living expenses set aside in a savings account. An emergency fund remains important in retirement. It’s not uncommon for a retired person to have a year’s worth of basic living expense money set aside in savings – separate from investment portfolios. Starting retirement with a large emergency fund can help provide the opportunity to let longer-term investments grow.
Consider working part time. Retiring after a long-term career does not always mean never working again – and that can be good for many reasons. Active retirees often enjoy working part time. Social interaction, helping support a cause, mentoring, and learning new things are all examples of positives that can come from working part time. Of course, in many cases, the extra money comes in handy too.
Make a plan to deal with medical emergencies. Health insurance, Medicare, and Medicare Supplemental policies can help with much of the financial risk if a major illness or injury occurs, but there might be other needs that these conventional health insurance policies don’t cover. The possible need for long-term care in a nursing home is a topic that could take up an entirely separate article, but for now, just understand that needing skilled nursing care for an extended period of time goes way beyond an emergency savings account. It’s also possible a retiree might simply need to pay for some help at home for a number of weeks while recovering from an illness or surgery – and that’s where emergency savings can certainly help.
Emergency supplies and equipment might be important too. Those of us that live in Florida know about getting our hurricane supplies ready each year. A relatively new item that is becoming a popular emergency supply item is the compact solar lantern/phone charger. Having a generator is a good idea too – and not just in Florida. And we all know someone in the mid-west that went without power for almost two weeks in the winter because of an ice storm.
Create an offline and online phone directory for emergency numbers. Important contacts should be at your fingertips in case of any emergency. Having quick access to both online and offline phone directories are an important solution. You can create a list of numbers highlighted with the type of emergency on your phone, in the cloud and on your desktop computer or laptop. Also, keep some hard copies of all those emergency contacts in your medical supplies box and your important document folders. It also makes sense to let a trusted family member know where to find your hard copy list of emergency contacts.
Understanding what potential emergencies are and considering them during your retirement planning phase can help you in managing them properly. Create a Plan B or even a Plan C to tackle these emergencies, just in case you need it. As the saying goes – “stuff” happens – and we all recognize that when emergencies arise, it’s often part of life – and it’s stressful. It’s also true that being prepared can make some of those emergencies less stressful – and less damaging to your financial well being.
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Presented by Clear View Financial Services, LLC. Opinions expressed are that of the author and are not endorsed by the named broker-dealer or its affiliates. All information herein has been prepared solely for informational purposes, and it is not an offer to buy or sell, or a solicitation of an offer to buy or sell any security or instrument or to participate in any particular trading strategy. The information in this article is not intended as tax or legal advice. You are encouraged to seek tax or legal advice from an independent professional advisor.