Study shows “sudden or unplanned financial expense” is their greatest concern.
A recent study by Apia Insurance has revealed that Baby Boomers’ biggest financial concern isn’t running out of money in retirement, but rather facing unexpected financial shocks.
The study found that more than 50% of participants over 55 years of age said that a “sudden or unplanned financial expense” was their biggest financial concern.
A sudden financial shock could be an unexpected health concern, financially supporting a family member through a tough time, housing repairs, or even a relationship breakdown.
These shocks can disrupt careful retirement planning as they may not neatly fit into any of the expenses you have budgeted for.
While these sorts of shocks can be managed when you are in full time work, it’s often much more difficult when you’re retired, on a fixed income, and your income opportunities are limited.
Apia’s head of customer value, Geoff Keogh, commenting about the study, remarked that “there’s an anxiety moving into retirement phase on the basis of your ability to come back from an unexpected fall,”
If we’re honest with ourselves, many of the financial shocks we face in retirement shouldn’t really come as much of a surprise at all. While we may not be able to safeguard ourselves against serious disasters, it’s a given that cars will need replacing, and housing repairs will need to be arranged. For this reason, we must ensure that our retirement plan leaves a buffer for these unexpected (but rather routine) expenses.
One way to protect yourself against these types of shocks is to allow for a buffer in your retirement plan. Alternatively, establishing a rainy day fund for unexpected expenses may be appropriate and give you peace of mind.