Forex Articles

Leaving the workforce means less financial flexibility and increased vulnerability to unexpected events. This is why it is important to prepare for setbacks and have contingency plans in place before retirement.

If you have a 401(k) or an individual retirement account (IRA), you have your entire nest egg in one or several mutual funds. If you have not been an active investor, it is high time to review where, exactly, your money is sitting. An aggressive stock mutual fund that was great when you were 45 can be disastrous at 65.

Stock market crashes can and do happen, which is why you should diversify away as much of the risk as possible. This does not mean going all-in on ultra-safe, short-term bond funds; they are safe, but they also have very little returns, which forces you to eat into the principal every month. Instead, spread your money into a few large-cap mutual funds, domestic and international, that feature big, established corporations with track records of paying dependable dividends.

You decrease your overall risk by not putting all your eggs in the same basket, and by owning big stalwarts that always have certain fundamental value. Ford Motor Company and Wal-Mart Stores, Inc. may suffer dips in their share prices, but they probably do not lose 99% of their value in a stock crash as the dot-coms did in the early 2000s. Consult with a financial advisor if you do not feel comfortable rebalancing your portfolio on your own.

An estimated one in 10 retirees relies on some type of income property for his income, and there is good reason for this strategy. Income property provides dependable income, allows for some nice tax breaks and offers superb inflation protection. The downside is you have to either be prepared to deal with maintenance or let a property management company take a cut of your monthly income. It also takes some local knowledge to ensure you get a property that rents easily. Owning income property is not for everyone, but adding a couple rental properties does wonders in securing your retirement against stock market swings and inflation surges.

What if one spouse suffers a stroke and the other is unable to provide sufficient care and support at home? Regular health insurance for seniors is great when breaking a leg, but it does not have much to offer for the years and years of assistance in these cases. Many believe Medicare will save the day without realizing there are some fairly strict limitations involved. Simply put, a lot of the people who worry the most about Medicare are in fact too well-off to qualify in the first place. Enter long-term care insurance. As the name implies, this is a different type of insurance than regular health insurance, and typically includes things such as extended in-home assistance, home modification, nursing home allowances and coordination assistance.

This type of insurance can be purchased privately or through your employer. Research your options before deciding on a plan, as the terms may differ considerably. Pay special attention to the clauses regarding pre-existing conditions; policy coverage limits, such as max cost per day in a nursing home; and waiting/elimination periods. Request multiple quotes, and check the company's financial stability at a rating website such as Moody's before signing the dotted line.

The premature death of a spouse can be disastrous to the financially dependent spouse. Some retirement assets simply pass on to the widow, but not all. Traditional corporate retirement plans may be generous while the former worker is alive, but that typically ends when he passes away. The widow may get something but almost certainly not as much as before. Run a what-if scenario where either spouse dies, and set up a life insurance policy to cover the gaps.

This may also be a good time to create a will. Family squabbles over assets tend to get ugly, and remarried couples with children from their first marriages in particular run the risk of costly legal battles and unintended consequences. Save everyone a lot of grief by sitting down with a lawyer and determining exactly how you want things to play out if you are gone.

It is an unfortunate fact that retirees only make up 15% of the population, yet they are the victims of almost a third of all reported scams. Identity theft in particular is on the rise as the elderly often have good credit ratings, little debt and poor awareness of the dangers. Make no mistake; falling prey to an identity thief can be a financial disaster on par with a stock market crash.

Protect yourself and your spouse by getting proper identity-theft protection. There are several companies that offer comprehensive packages, but the main features to have are credit monitoring, resolution assistance and insurance. Credit monitoring automatically sounds the alarm the instant someone attempts to open a line of credit in your name, enabling you to shut down the attempt before any damage is incurred. If the scammers manage to take on debt in your name anyway, the resolution assistance professionals contact the creditors to untangle the mess and save you many hours on the phone. If the resolution assistance does not manage to get the unjust debt off your back, the insurance covers the cost so you do not suffer any financial damages.

In addition to the steps above, you should also have a cash cushion of at least a few months of living expenses. In the case of injury or death of a spouse, you need to have your day-to-day expenses covered until insurance is paid out and assets are settled. This emergency fund should be immediately accessible and not prone to fluctuations. A bank savings account is ideal, as an emergency fund in other assets could take a long time to become liquid. You could also be forced to sell at a loss since you cannot wait for a good price.