Five Threats To Retirement Savings

Saving for retirement does not always go as planned. Retirement savings are subject to threats, both direct and indirect.

Some of these threats are just unfortunate circumstances, while others are deliberate actions trying to take advantage of the investor.

1. Boomerang Children

These are the children of the Boomer Generation that are still being supported by their parents by living at home. According to a study by Hearts & Wallets, only 21 percent of Boomers still supporting their children are fully retired, compared to the 52 percent who are not supporting their children.

To avoid this threat, investors need to teach their children how to properly handle finances and be self-sufficient. This way they are less likely to move back in with their parents due to money issues.

2. Caring for Parents

As investors’ parents age, they often need help either with personal care or finances. Helping them financially can make it more difficult for the adult child to save for retirement. Also, 25 percent of adult children younger than 65 help parents with chores, personal care, etc. This may lead to less time spent at a paying job, causing them to earn less than they otherwise would earn.

Although difficult to avoid, there are assistance programs and other means for children to help their parents get what they need without sacrificing their time at work.

3. Spousal Death without Life Insurance

For those who have a mortgage, debt, or children to support, life insurance can be critical. It can also be critical to those in their final years of saving for retirement. The loss of that second income can hit a spouse hard financially, making saving next to impossible.

Spouses should evaluate life insurance options and have a clear plan if something were to happen to one of them.

4. Medical Crisis

In the US, medical bills are the leading cause of bankruptcy. Those with injuries or a chronic illness might not be able to work, causing investors to dig into savings to pay for medical bills. Long-term care is also very expensive and can derail even the most stable retirement plans.

Health Savings Accounts are one way to battle this issue. With this account, investors can use it to pay qualified medical expenses tax-free at any time.

5. Scams

There are plenty of people attempting to scam people out of their retirement savings. The Financial Industry Regulatory Authority advises people to be cautious around schemes that promise returns of 12 percent or higher. Often these scammers use early retirement seminars to pitch their strategies.

Being aware of potential threats is the first step to avoiding them. Meeting with a financial planner can also help to address concerns investors might have about their retirement savings. To maximize potential retirement savings, contact Mountain West IRA to learn about their self-directed accounts and allowable investments.