5 Surprises That Could Derail Your Retirement Plans

Depending on how much longer you plan to work, this could be a good time to make a professional pivot. Use this opportunity to review your goals, priorities and what you want for the next stage of your career. “Perhaps this was the motivation you needed to move in a new and exciting direction,” Duncan says.

You get divorced

Divorce rates among older Americans have surged in the past few decades. Among people 65 and older, the divorce rate tripled from 1990 to 2021.

How to avoid retirement derailment: Call in the pros. “I recommend working with a divorce attorney combined with a certified divorce financial analyst (CDFA) to help ensure there is an equitable split of assets,” Swad says.

After you reach a settlement, evaluate where you stand in relation to your later-life goals. You may need to work longer, sock more money away in your retirement accounts — including the allowable catch-up contributions for those 50 or older — or adjust your portfolio’s investment allocation to get back on track.

Also review your estate plan to ensure your health care and financial power of attorney, as well as account benefactors, reflect your post-divorce preferences.

You have a health crisis

The medical bill that can come with a sudden accident, unexpected diagnosis, emergency surgery or other health crisis can throw your finances into disarray.

How to avoid retirement derailment: Enlist a trusted friend or family member to help with financial tasks, such as reviewing and paying bills, says Crystal McKeon, a financial planner and the chief compliance officer at Houston-based TSA Wealth Management, who was diagnosed with cancer in 2020. “It is hard when you are dealing with a major medical issue to focus on anything else,” she says.

Make the most out of your health insurance. Understand your deductibles and out-of-pocket maximums, and stay in-network when possible. Check if your treatment center provides a financial counselor to help ensure procedures and providers are covered.

The benefit of having a financial counselor is essentially having a second set of eyes looking out for you financially. The doctor’s job is to look out for you physically, and the finances are not on the forefront of their concerns nor their specialty. A counselor makes sure you are aware of your financial liabilities and can hopefully catch anything before it gets out of hand.

You become a caregiver

There are 48 million unpaid family caregivers in the U.S., according to recent AARP research. The number of working caregivers is staggering: 61 percent of the nation’s family caregivers also hold down jobs.

How to avoid retirement derailment: Start by getting a solid understanding of your loved one’s health care needs and financial resources, so you can act effectively. Have open conversations with family members to ensure everyone is aligned on the financials and the care plans, says Carolyn McClanahan, a certified financial planner, physician and founder of Life Planning Partners in Jacksonville, Florida. Clarify how expenses such as groceries, prescriptions and in-home care aides will be divided among your loved one’s resources and any needed family contributions. Document all plans and agreements in writing.

Review long-term care policies as well as legal documents that your loved one may have, such as designated financial power of attorney.

If you’re employed, explore workplace benefits such as paid caregiving leave and employee assistance programs that offer caregiving support. One-third of employers offer paid leave to care for immediate family members, according to the Society for Human Resource Management. Some states have mandatory paid family leave laws.

Call the local Area Agency on Aging and visit eldercare.acl.gov to learn about free and low-cost assistance.

Your adult kid needs financial assistance

Young adults, grappling with high prices on everything from groceries to housing, are leaning on parents for financial help. An increasing number of first-time buyers rely on support from older generations to buy a home, according to Freddie Mac.

How to avoid retirement derailment: Before opening your wallet, get a clear understanding of your child’s needs and assess how your contribution could affect your finances. Set firm boundaries and expectations. For instance, if a child moves back home, establish a plan for how long they’ll stay and what financial contribution they’ll make to the household, McClanahan says.

If your child requests a large sum of money, such as a loan for a home purchase, take a close look at your finances to see what you can afford to lend before you make any commitments. Your retirement savings and financial security come first. If you’re in the position to provide your kid some financial instance, create a formal agreement outlining specifics, including the loan amount, the interest rate and repayment terms, advises Patrick York, a financial planner and a partner at Premier Path Wealth Partners in Madison, New Jersey.