Outsmart Costly Retirement Scenarios

How do you and your pre-emptive planner prepare for costly financial scenarios such as ill health or the early loss of a job? A big part of that calls for adopting a pre-emptive planning stance of your own.

One forward-thinking tactic is to combine a good investment strategy with increased liquidity – because you may need to get to your cash fast if something bad happens.

“To maximize income in retirement while maintaining liquidity, consider options beyond low-yielding savings accounts,” Timmermann says. “Some annuity and home equity products enable you to have access to cash while optimizing returns at the same time. Ultimately, the capacity to withstand the unexpected is dependent on the ability of people to imagine, anticipate and prepare for the circumstances that are often beyond their control.”

The study takes a lighthearted approach to a serious matter to classify retirement investors in one of the following 10 categories.

1. Snoozers who don’t think about future risks at all. Future risks are not on their radar screens.
2. Active Resisters who “choose to snooze,” or choose to ignore information about future risks.
3. Immobilized Worriers who understand future risks, but whose worry prevents them from acting.
4. Oversleepers who are late in their thinking and planning and may regard their decision or action windows as “come and gone.”
5. Wood Knockers who think about the unexpected but rely on hope; they choose optimism. Somehow, things will “work out.”
6. Plan B-ers who hold on to a contingency plan, or the loose idea of one, as a protection against trouble ahead. A Plan B may be a “plan” in name only.
7. Realists who use the lessons of experience to think about the future.
8. Stewers and Brewers who take a while to make decisions. Stewers may fuss and fret, while Brewers play with ideas and planning strategies.
9. Compromisers who think about today and tomorrow and balance their current needs against future risks.
10. Pre-emptive Planners who strive to pre-empt future risks, or at least their consequences.

If you have a financial planner, set up a meeting to discuss those “surprises’ that might dent your retirement account down the road. If not, learn how to become a pre-emptive planner and take control over your own money, no matter what disaster may be lurking in the shadows.

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