What Can Cause a Retirement Income Gap?

February 14, 2017

The ideal retirement is smooth sailing – no financial bumps, no health issues – just a happy, carefree life. However, we all know this is incredibly unrealistic. While working up to the level of “Doomsday Prepper” may not be necessary, planning ahead may help you save time, money, and energy in retirement.

Here’s five scenarios you may want to consider before clocking out one last time:

  1. Forced Retirement
    You may feel as though you’re in great shape for retirement. Just a few more years of work and you’re set for life! However, sometimes companies can have other ideas, and send you into retirement earlier than you expected.

  2. Planned Retirement
    Even if your plan is perfectly in place and goes off without a hitch, you’re still making a huge lifestyle change. You may need to find a way to match your pre-retirement income without a paycheck.

  3. Creeping Inflation
    While Social Security recipients may receive a Cost of Living Adjustment (COLA), few sources of income will keep up with inflation. As years pass in retirement, it’s important to have planned ahead for a steady rate of inflation. Without a plan in place to outpace inflation, your buying power may decrease year after year.

  4. Nursing Home or Assisted Living
    Accidents happen, and modern healthcare isn’t cheap. Retirement could be going swimmingly until an unexpected accident or change in your overall health requires additional care (and the finances to cover it).

  5. Death of the First Spouse
    Grim as it may be, many people neglect to plan for the income gap created when the first spouse passes away. Pensions may be decreased or even eliminated based on spousal benefits, and married couples will lose the lesser of their two Social Security benefits.

Our intent is not to alarm you, but to help you understand that the above are real-life scenarios you could encounter in retirement.  While income gaps in retirement aren’t always predictable, there are strategies that may help mitigate your overall  retirement gaps. Setting up an appointment with one of our financial professionals is a great first step in creating your retirement plan and  potentially avoiding some of these retirement income gaps.  Kemp Harvest Financial Group is positioned to assist you in planning for the unexpected. 

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The opinions voiced in this article are for general information only. They are not intended to provide specific advice or recommendations for any individual and do not constitute an endorsement by. To determine which investments may be appropriate for you, consult with your financial professional. Please remember that investment decisions should be based on an individual’s goals, time horizon, and tolerance for risk.