How to Hedge 7 Retirement Risks

These strategies will help you cope with common retirement worries.

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Falling home values. For most people, a home is their most significant financial asset. If you own a home without a mortgage, you have eliminated a significant retirement expense. You could also downsize to a smaller home in a less expensive area and add the profit to your retirement savings or tap your home equity for emergencies. However, many home-owning retirees (44 percent) say they are concerned that the equity in their home may not be sufficient to support their retirement plans. "Unlike stock prices that have come back somewhat, housing prices really haven't," says Rappaport.

Forced retirement. While many current workers are aiming to retire at age 65 or later (55 percent), most current retirees (82 percent) left the workforce before the age of 65 (82 percent) and almost a third (31 percent) retired before age 55. Many people find themselves forced into retirement earlier than planned due to a health problem, disability, job loss, or to care for a spouse or family member. An unplanned early retirement can significantly weaken your financial security because there are now extra years you will need to finance. It's a good idea to keep your skills current and your resume polished in case you need to find a new employer in your final years in the workforce. The good news is that many early retirees eventually return to paid employment, SOA found, typically using the same training and skills in their new job as they used before retiring.

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