Episode 62 – Curve-Ball Proofing Your Retirement Plan

Curve-Ball Proofing Your Retirement Plan by Astra Financial

Whether you like it or not, you’re retirement could come sooner than anticipated!

  • Health
  • Family
  • Relationships

They can all have an effect on your retirement plan. And because I don’t want anyone to have an unpleasant retirement, this week on the Heart of Your Money Podcast, I’ll be talking about how you can overcome a retirement curve ball!

While you can’t necessarily prevent these events from happening, you can prepare so that you’re secure if they do happen. Listen here:

Show Notes:


Hey there. Welcome back!

Today let’s talk about the curve balls that might be thrown your way while planning for retirement. It’s an unfortunate reality, but all of us will face a crisis at some time. We have no control over what, and when it hits us but the impact and the lasting effect will depend largely on how we respond to it.

Have you had the Debbie downer talk? What I mean by that is, have you had the, what if conversations? I know they’re not very fun, but they’re necessary. I’m gonna share. So I’ll share a few examples of the biggest curve balls I’ve seen while I share these and ask you a question think about your own situation.

If you’re driving, don’t close your eyes, but really tap in deep and see how it feels. This can be considered your bit of a stress test for you. Okay. So the first example, so the biggest curve ball I’ve seen is that unanticipated early retirement. And so generally that is later in life. When you’re, you know, you’re already getting very close to retirement, but maybe you, you’re still thinking maybe five, seven, maybe 10 years.

If you’re lucky, this usually comes where you’re being asked to take in early retirement. So it’s usually from downsizing, employer cuts, the job cuts that happen and this I’ve seen, it happens. Here’s my question for you, would you have enough saved up in retirement assets to sustain your current lifestyle?

And, you know, there’s some options there, of course  with planning, there’s continuing to find a different job and maybe, you know, contribute and start a different pension plan. But depending on how old you are and where you are in life, is it an option? Anyway, so that’s the first example I’ve seen.

The second one is disability. It’s not as common as that unanticipated being forced into early retirement, but this one does happen. I see it. It’s your inability to work due to an illness or an accident. And it puts a big dent on your finances. So here’s my question how will you meet your day to day living expenses?

If you couldn’t work anymore? That one’s a bit of a doozy. I know. But these are questions that we have to ask. And then the third, biggest curve ball I’ve seen is changes in a family situation and that’s usually divorce or death. And so, we never plan for either one of those things to happen meaning, you know, we don’t know the exact date. We can, even in financial planning, we can only kind of make assumptions, but think about it and see how this sits. How does this affect your plan. Does divorce cut things in half death, of course all of a sudden left with crippling debt. Like these are, these are some heavy conversations and heavy things going through. So I’m not gonna just leave you with that. I’m gonna talk about, so what are some things you can do for this? How do you prepare for the unexpected? Well, first of all, it’s just about starting to talk about it, just asking yourself those questions and bring to mind you know, how you feel like you would fare on a scale of one to 10 that’s starting the ball rolling.

One of the things in there that’s super important- It doesn’t matter about age, but I am gonna throw in there that hopefully it is something that we can tackle. Early on when we’re young and that’s ensuring there’s proper life insurance coverage, I’m a hard sell on life insurance. It has to really fit in need.

But we, most of us have that need, you have a mortgage. Then you’re gonna need some term insurance to cover the duration of that mortgage, because generally we do need insurance to cover debt because one of those questions, if something were to happen to you is that leaving somebody else holding everything and having to cover the payments.

So we ensure our house and our car. Why not ourselves and our income. So that’s that term insurance piece that I talked about with it, it’s life insurance, but it pays a lump sum to cover debts. And that’s that example of the mortgage insurance that I use. It has an end date.

So if you have a mortgage, the common practice was to just have it last to your mortgage timeframe, 20 years or 25 years. I’m gonna say. Term insurance at minimum, we should just be getting it until age 65. It costs just a tiny bit more, not expensive. It’s still very affordable, but we should have it as long as we can.

And so that term to 65 is great. And this is where I’m really talking to our retirees and talking to our clients and saying, you know, your young adult children should be having this right now because it is so cheap, like $25 a month until age 65. Heck. Yeah, of course. But if we wait until we’re 40 or 50 and we wanna try and cover a debt, it’s gonna be astronomically expensive.

The other part of that proper life insurance coverage is disability insurance. And not everybody needs disability insurance. There’s different types, but it’s definitely worth a conversation and I’ll have no problem saying, Nope, you don’t need your own personal disability insurance. What it is, is that it pays a lump sum each month in the event of sickness or injury, typical disability, if you have a disability insurance, whether it’s through your employer or your own.

It is not gonna pay you more than 65 to 75%. And that’s on the top end of current income. You’ll never be able to get a hundred percent of your income if you’re on disability. And so that’s that question. Can you live off a reduced amount? Another one part of that insurance piece that’s super important is critical illness.

Again, if you can get this, when you’re young, you get it, you lock it in, it’s super affordable. And it means that in the top major I think it’s top 25 illnesses it covers them. It pays out a lump sum, one cash lump sum. I’ll share with you that I have one and it’s for, I actually think I need more but it’s for a hundred thousand dollars and that’s gonna serve a purpose to put cash in my hands within 10 days of diagnosis and, you know, doctor signing off saying, yes she has a critical illness and once all the claim has gone through, I can get that lump sum check. What I decide to do with it, everybody has a different need and want, for me, my initial thought was okay, if I wanna go to the Mayo clinic, if I wanna fly down to the states and get the best team of doctors, at least a hundred thousand will get me started.

I’ve talked to people that have used it to go on family holiday. They’ve taken their entire family on vacations and or another story from many years ago that I remember was a client – she has survived, she’s alive. So you don’t have to die to have a critical illness policy payout. It just means you’re diagnosed.

And she had breast cancer and she had used her policy, she didn’t have a hundred thousand. It was much less, but she used hers for alternative health- the care and therapy. And she went to another city to see a specialist. And she’s still cancer free. I mean, so that’s an amazing, great story.

I’m not condoning and saying it was because of alternative treatment, but boy, you know, in her case it worked out really well and that was her priority. So everybody has a different need for it, but that is important. Ensure you have proper life insurance and the proper insurance in place. That’s gonna help you prepare for the unexpected.

The other one (curveball) is another thing you can do is bulk up your emergency savings. And so bulking up your cash. It can be devastating if you’re not prepared. And so that critical illness policy that gives you that lump sum, that’s where you know that cash in hand can go a long way. If you can’t go back to work.

And the long term disability/ short term disability is really only 60 or 65% of your income. It’s gonna give you the top up. So make sure you’re saving. So that question is, have you saved enough. And do you have enough cash on hand? Do you have access to something that is going to help with an immediate loss of income?

If the bills still need to be paid and it stops you from having to access retirement savings? The best, the smartest strategy right now is to just eliminate as much debt as possible right now is knowing that down the road, how does this affect if all of a sudden you’re buying, you know, multiple things and you’re extending your debt level – weigh the pros and cons and see how does this work in the, in case if I lose my job or if I get sick, can I make these payments?

I know that right now with inflation as well, with the cost of things and interest rates going up, to carry debt this is a great time to rethink and kind of check yourself before you wreck yourself and be like, you know, I think I’m gonna pass on whatever it was you were thinking that you were gonna have to finance.

So another –  the last thing that you can do is really create a plan, work with a financial expert. That’ll help you make the best bang for your buck. So if you’re short money and you feel like, well, why would I have a financial advisor if I don’t have enough?

No, they’re gonna do the risk testing for you point out some areas and you can actually take action right now. Prepare yourself. It really just means having some tough conversations right now, but it’s best to have it now, before something happens. So. My final note, actually, that’s not true.

I’m gonna talk a little just for another second, but here it is. I just wanna share that life doesn’t always go perfectly. There will be twists and turns. The impact of significant life events will be much easier to handle with just a little bit of pre-planning. So my take, for you, is to ask yourself the stress test questions I mentioned.

So they are, how does it look if you were forced to an early reduced retirement and sit with that and see how it feels. 

Next question. If you had a disability or illness, what does that look like in your financial situation? 

And lastly, if your family situation changed, meaning death or divorce, what does that look like?

Okay, on that note. Let me just throw out a gratitude practice. Since this week’s podcast was a bit of a bummer topic. I feel like it was really heavy, I left you with some questions and it’s really heavy. I wanna flip the ending on a positive note here. I want to thank you for listening.

Gratitude practice always helps. There’s a scientific study. It helps increase happiness. And so I’ve definitely been practicing my gratitude and I want to thank you for listening. I want to send you some gratitude for sending me emails with questions and comments and for supporting this podcast because you know, finance is pretty boring.

It’s a niche topic here. You gotta really actually be interested to listen to me and talk about some of this. I deeply appreciate you. And I want to send my thanks until next week. Take care.