Obstacles to Ideal Retirement - Part 2

Many things can push you off course when you're planning for retirement.

Long-Term Disability

A long-term disability or a permanent disability can halt you retirement savings very quickly. You may even need to tap into what savings you had put away to survive without your income. Planning for a long-term disability by purchasing a long-term disability insurance policy is the best way around this obstacle. Make sure you have enough money in your emergency fund to cover any short-term illnesses that may occur and spend your insurance money on the long-term disability policy.

Death of or Divorce from Your Spouse

The death of your spouse can be catastrophic to your future. If your spouse's income was larger that yours, you may feel you just don't have anything extra to contribute to your retirement plan right now. Be sure both you and your spouse are properly insured. Life insurance should be used to cover the loss of an income stream. Also check those beneficiary designations; you should be the beneficiary on his or her retirement plans and he or she on yours. If there was not much saved for retirement, you will need to begin to do it on your own. It is never too late to start saving!

Many women will tell you that a divorce is harder to deal with that the death of a spouse. Retirement planning gets tricky during a divorce. If your income has been less than his over the life of the marriage and your retirement savings are less than his, you will want to ask for part of his retirement savings. You want half of the combined qualified retirement savings. You should also look to receive part of his pension if he is eligible for one. Alimony is considered income to you, and if that is the only income you are receiving, you may be eligible to set up an IRA (independent retirement account) for yourself.

Children and Grandchildren

Children can be the delight of out lives and are an awesome responsibility. Because we are the primary caregivers for our children, women are more often in and out of the job market when children are young so that they can be home with them. But that also takes us out of the retirement savings market as well. If this happens to you, be sure you check out your eligibility to set up a spousal IRA for the years you are at home. If you are self-employed and working at home, be sure you check into the various types of self-employment retirement plans.

Boomerang kids are another issue. You know the ones I mean here. They left home once but keep bouncing back again and again, sometimes with children. They have it pretty good living at home---meals, laundry, and a clean house. Don't make it too convenient, or they will never leave. I am a big believer in charging the kids rent and setting rules if they ask to come back home to live. There will always be extenuating circumstances, but once they get on their feet, don't make it too easy.

What about those wonderful grandchildren you love so much? Over 10 million grandparents are raising their grandchildren. Many other grandparents are providing daily childcare so that their adult kids can go to work. Again, there may be no other way to handle this situation, but at least you are now aware. Make it a choice if you want to baby sit the grandchildren.