How to Overcome 12 Retirement Challenges

With retirement surprises becoming the norm, planning for the unexpected has become essential.


The roadblocks to a successful retirement have become more frequent and severe, ranging from Wall Street and housing meltdowns to rising healthcare costs and concerns about the long-term stability of Social Security, pensions, and government safety net programs. But according to a new study by MetLife and the Scripps Gerontology Center at Miami University, there are common ways that people are stepping up to create better outcomes for their retirement years.

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More than 1,000 people ages 50 to 70 were surveyed through online polling and nearly 75 people were given in-depth, one-hour interviews. The heightened uncertainty about retirement was reflected by the finding that more than half of those interviewed had already experienced an event that changed their retirement plans.

Major unexpected expenses were encountered by 35 percent of those surveyed, with costs of $6,500 to $8,300 and payments usually lasting for many months. Only about half of those polled had a contingency plan, the research found, and only 1 in 4 people were confident they could execute their retirement plans as intended.

"Life's surprises can make or break even a good plan for a satisfying retirement," the study said. Withstanding the unexpected "is dependent upon the capacity of individuals to imagine, anticipate, and prepare for circumstances that are sometimes well beyond their control."

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"As a life stage, retirement in the U.S. today is arguably more ambiguous, unstable,and unpredictable than it has ever been," the study added. At the same time, responsibility for an adequate retirement has shifted from society, via employer pensions and retiree health insurance, to the individual, through self-directed retirement accounts and insurance that supplements Medicare.

Researchers uncovered a common set of a "daunting dozen" retirement challenges that people already had faced or feared may occur:

1. Declining or stagnant income or loss of job

2. Loss or erosion of pension

3. Catastrophic illness or disability

4. Loss of health insurance or escalation of healthcare costs

5. Death of a spouse

6. Caregiving demands

7. Financial problems of children or other family members

8. Investment losses

9. Loss or erosion of social benefits

10. Living "too long," or outliving one's resources

11. Combination of scenarios

12. Windfalls: unexpected, but welcome, scenarios

In addition, researchers said, four core financial challenges make planning especially difficult. They include concern about the adequacy of future health insurance, growing recognition and concern about long-term care costs, shaky pensions and retirement accounts, and lack of confidence in the stock market as a reliable investment choice.

Still, the study reported, people who have handled these and other challenges attributed their success to common approaches:

• Has a sense of self-reliance

• Thinks about the future—all the way to the end

• Anticipates or expects the unexpected

• Designates a budget column, today, for a future self

• Sets and lives by personal financial rules

• Stops, sits down, focuses on the future, and talks about it

• Engages in the "what ifs?"

• Puts pencil to paper, or cursor to screen—does the math; all of it

• Gathers information

• Seeks advice

• Gets the house in order—literally

• Starts as soon as possible

Twitter: @PhilMoeller