What do I do if something unexpected happens?

August 17, 2023 | David Edmisten, CFP®

What do I do if something unexpected happens?

Life in retirement should be a time of enjoyment - spending time with loved ones, pursuing our passions, enjoying more of the world and giving more to the communities that are important to us. Thoughtful, careful and informed planning can help put us in the best position to do this. 

But life can still bring changes and challenges that disrupt even the best laid plans. For that reason, it is important that every early retiree also have a well thought out risk management plan for retirement.

Some of the major risks that can affect a retirement plan include unexpected illness and health issues; an untimely death of a spouse or close family member; lawsuits; accidents in our vehicles or on our property; or mental health issues including cognitive decline, Alzheimer's disease and the like.

While we all hope for a stress free and healthy retirement, the reality is that the majority of retirees will encounter one or more of the risks listed above during their retirement. By thinking through the potential impacts of these risks, an early retiree can put a plan in place to preserve their retirement savings and lifestyle while addressing the risks that may present themselves at any given time.

A solid retirement risk management plan will give consideration to health insurance, long term care needs, auto, property and umbrella insurance, life insurance, caregiving, and legal matters such as designating powers of attorney, guardians and the potential needs for trusts or other legal documents to ensure one's wishes are carried out. 

For early retirees, this may mean giving some more careful consideration to health and life insurance, as these benefits may have been provided by an employer and are now self-provided (and paid for!). The amount and type of coverage for various types of insurance may have changed significantly compared to what was needed during one's working years.

Working with a financial planner and a qualified insurance broker can help one determine the coverage and types of policies that are best suited to meet one's needs. Additionally, a financial planner can also help determine if one is in a position to self-insure some of these risks. 

The most confident early retirees have a well thought out risk management plan, with adequate preparation and potential coverage to handle any unexpected challenges that may come their way.

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About the Author:

David Edmisten, CFP®, is the Founder of Next Phase Financial Planning, LLC, a financial advisor in Prescott, AZ. Next Phase Financial Planning provides retirement, investment and tax planning that helps corporate employees retire with both financial and lifestyle security.