The hidden threats to your nest egg Divorces, layoffs and heart attacks derail
a lot more retirements than you'd think. Here's how to make sure yours is secure.
"There's been a lot of talk about how the health (of older people) is improving and how older people are going to be living longer and healthier than before" All that is certainly true, but I think we tend to lose sight of the fact that these problems are surprisingly frequent."
The effects on long-term wealth can be profound:
The study found that the median wealth for healthy people with no work-related limitations grew 45.7% during the 10-year study. Those who experienced such health restrictions, by contrast, saw their median net worth increase just 17.1%.
Simply being diagnosed with a major medical condition, even if no work limitations were involved, had a dampening effect on wealth growth. Those who were diagnosed during the study period saw a 23.5% increase in their net worth, while those who had the condition at the start of the survey had just 16.1% growth.
Those who were laid off during the study decade experienced similar stunting of their net worth, which grew by 19.2% . (If they were out of work at the time the study started in 1992, the results were worse: just 14.3% growth.)
The picture was even grimmer for the divorced and disabled. Those who split up during the 10-year study saw just 4.3% growth in their median wealth over the 10 years, and those with severe disabilities experienced a 9.8% decline in their median net worth
How to protect yourself
These are scary statistics, but these studies convey an important truth about retirement planning: you can't assume everything will go right. Here's how to put that knowledge to work:
Don't delay saving for retirement. The more money you have piled up by your 50s, the better you'll be able to survive whatever surprises life throws your way. People who put off retirement saving for other goals, or simply spend more, are missing out on critical time that can help them growth their wealth. But they're also leaving themselves vulnerable to the setbacks described above that could prevent them from accumulating needed wealthy. Take advantage of any workplace retirement plans or, if you don't have access to any, start setting aside money on your own.
Get covered. Health and disability insurance can help insulate you from the financial fallout of illness or accident. If you can't get this coverage through an employer, consider buying individual policies. If you find yourself without health insurance, read "A survival guide for the uninsured" for tips on how to protect your well-being.
Continuously update your job skills and contacts. Keep yourself marketable by taking on new responsibilities or learning new skills through courses or seminars. Network to improve your contacts at other companies.
Mind your health. We can't make ourselves immune from disease, but we can better our odds for a long, healthy life by eating right, exercising, getting regular checkups and finding appropriate ways to deal with stress. Early detection is the next best thing to prevention, so schedule important health screens like mammograms, colonoscopies, electrocardiograms (EKGs) and exercise stress tests.
Mind your marriage. Easier said than done, but if an investment in counseling or a couples retreat can stave off a costly breakup, then make it.
"There's been a lot of talk about how the health (of older people) is improving and how older people are going to be living longer and healthier than before" All that is certainly true, but I think we tend to lose sight of the fact that these problems are surprisingly frequent."
The effects on long-term wealth can be profound:
The study found that the median wealth for healthy people with no work-related limitations grew 45.7% during the 10-year study. Those who experienced such health restrictions, by contrast, saw their median net worth increase just 17.1%.
Simply being diagnosed with a major medical condition, even if no work limitations were involved, had a dampening effect on wealth growth. Those who were diagnosed during the study period saw a 23.5% increase in their net worth, while those who had the condition at the start of the survey had just 16.1% growth.
Those who were laid off during the study decade experienced similar stunting of their net worth, which grew by 19.2% . (If they were out of work at the time the study started in 1992, the results were worse: just 14.3% growth.)
The picture was even grimmer for the divorced and disabled. Those who split up during the 10-year study saw just 4.3% growth in their median wealth over the 10 years, and those with severe disabilities experienced a 9.8% decline in their median net worth
How to protect yourself
These are scary statistics, but these studies convey an important truth about retirement planning: you can't assume everything will go right. Here's how to put that knowledge to work:
Don't delay saving for retirement. The more money you have piled up by your 50s, the better you'll be able to survive whatever surprises life throws your way. People who put off retirement saving for other goals, or simply spend more, are missing out on critical time that can help them growth their wealth. But they're also leaving themselves vulnerable to the setbacks described above that could prevent them from accumulating needed wealthy. Take advantage of any workplace retirement plans or, if you don't have access to any, start setting aside money on your own.
Get covered. Health and disability insurance can help insulate you from the financial fallout of illness or accident. If you can't get this coverage through an employer, consider buying individual policies. If you find yourself without health insurance, read "A survival guide for the uninsured" for tips on how to protect your well-being.
Continuously update your job skills and contacts. Keep yourself marketable by taking on new responsibilities or learning new skills through courses or seminars. Network to improve your contacts at other companies.
Mind your health. We can't make ourselves immune from disease, but we can better our odds for a long, healthy life by eating right, exercising, getting regular checkups and finding appropriate ways to deal with stress. Early detection is the next best thing to prevention, so schedule important health screens like mammograms, colonoscopies, electrocardiograms (EKGs) and exercise stress tests.
Mind your marriage. Easier said than done, but if an investment in counseling or a couples retreat can stave off a costly breakup, then make it.