nce your kids are out of the house and on their own, you may feel that a great financial burden has been lifted from your shoulders. But retirement looms, and this is no time to coast. As your working years grow fewer, you don’t have as much time as you once did to recover from unexpected setbacks. You need to take additional steps to protect what you have.

Life Insurance

Now that your children are self-supporting, you may feel you no longer need the life insurance policy you bought when they were babies. But if you are like many families, you may have wiped out your savings to put your kids through college. Now you need to begin saving aggressively for retirement. Life insurance can be an important part of a retirement savings program. At this point you may have 10 or 20 more years of an active working life left. These are likely to be the most productive and highest-earning years of your life. What would happen if you died suddenly? Your spouse, deprived of the benefits of your most productive years, could be forced to drastically cut back on his or her retirement plans. Life insurance proceeds, invested wisely, could provide your spouse a stream of income for several decades. Life insurance can also ensure your spouse is not saddled with debts if you should die prematurely. In the past, a family’s home mortgage was largely paid down by the time the kids were in college. But nowadays many people have cashed out some or all of the equity from their homes to finance a better lifestyle or perhaps a second home. Life insurance can ensure that your spouse can continue to live in the style to which he or she has become accustomed.

Long-Term Care Insurance

One of the biggest threats to your retirement plans is the cost of long-term care. A year in a nursing home averages more than $60,000. Home care can cost $20,000 to $30,000 annually for just four or five hours of care each day, and that doesn’t include the cost of skilled caregivers, such as therapists. If you or your spouse become chronically ill or disabled, it’s not hard to see how your savings could be wiped out. Medicaid, a government program, only kicks in once your assets are significantly depleted, and you may not get exactly the care you want through Medicaid. That’s why long-term care insurance should be a serious consideration in your retirement security planning.

Savings and Investments

Many workers from our parents’ generation could count on a financially secure retirement thanks to a guaranteed lifetime pension from their employers. That’s no longer the case. Nowadays, workers must take responsibility for their own retirement. At this point you should have quite a bit of savings tucked away in a 401(k), and IRA or some other type tax-deferred retirement plan. If not, it’s not too late to get going. Most of these plans have a so-called “catch-up” provision that allows you to contribute extra money to your retirement plan. For example, the $15,500 maximum annual contribution to a 401(k) plan rises to $20,500 once you turn 50. Make sure your retirement investments are well diversified in a broad mix of stocks and bonds. Many workers unwittingly allow their own company’s stock to take up a dangerously large portion of their retirement accounts. Companies often encourage this by offering their stock for sale to employees at a discount or by using it to match retirement plan contributions. But if you’re receiving a regular paycheck – not to mention health insurance and other benefits – from a company, a great deal of your personal financial security already rides on the fortunes of that firm. Don’t compound that risk by making its stock a large part of your retirement portfolio.

Share this