Reality Blindsides Many Retirement Plans

Share Article

Senior Financial Advisor Warns of Potential Problems

Job loss, divorce, the death of a spouse as well as a serious illness turn lives upside down

Paul, 60, and Mara, 59, thought they were finally going to be able to save aggressively for retirement. Their kids were now out on their own and all their savings would go toward their needs. Then, tragedy struck. Paul was diagnosed with cancer. The couple's retirement plan was suddenly in peril.

While Paul and Mara are fictional characters, such tragic scenarios wreak real havoc on people's lives all the time. "Job loss, divorce, the death of a spouse as well as a serious illness turn lives upside down," says local financial advisor Alan Morgan, president and founder of Strategic Advisors of Illinois.

"Making matters worse, many people wait until later in life to earnestly save for retirement. Pre-retirees are thus often blindsided by life's harsh realities. In fact, there is new evidence that these blind-siding events happen far more frequently than you might think, and that they are causing severe financial distress," he adds.

In a recently-published study that tracked adults in their 50s and early 60s from 1992 to 2002, one in three suffered a medical problem that limited their ability to work. More than 10% became either severely disabled or entered a nursing home. About one-quarter had to care for a frail parent or in-law. And almost 10% of the married participants became widowed over the course of the study by the Center for Retirement Research at Boston College. In the study, 69% of the single participants and 87% of the couples experienced at least one "shock," such as loss of job or spouse.

What's even more worrisome, says Morgan, is the decimating effect on wealth wrought by these personal disasters. (See accompanying table.) The damage is greater for unmarried individuals because they lack the benefit of a partner's resources, Boston College Center for Retirement researchers say.

Among study participants, 41% suffered a major medical condition such as cancer, stroke, or lung or heart disease, with men falling ill more than women and singles more than married individuals. Making matters worse, the cost of health care has been inflating 30% faster in recent years than prices generally. Even if you stay healthy, premiums for insurance rise with age. When a medical crisis arises, however, disposable income is often reduced sharply, leaving less cash to stash for retirement.

Job loss can also wreck a savings plan. Many middle-aged employees enjoy career-high salaries. Those who get laid-off (18.7%, in the study) are frequently forced to accept lower-paying positions. In addition, married individuals' wealth can be eroded when divorce or widowhood suddenly eliminates a second paycheck, other benefits, or the cost advantage of shared living expenses.

What can you do to shield yourself and your loved ones from being blindsided by life's harshest blows? "Whether you are 22 or 52, it is important to save as much as you can, while you can--before circumstances rock your world," says Morgan. "Yes, life is full of surprises, and they're not always pleasant. But by saving early and often, along with getting proper insurance coverage and creating an estate plan, you can be ready for the curveballs that are likely to come your way."

*** About Alan Morgan and Strategic Advisors of Illinois ***

Alan Morgan is a Certified Public Accountant, as well as a CERTIFIED FINANCIAL PLANNER™ professional with over 14 years experience in the financial industry. His professional focus is helping individuals who are preparing for or just entering retirement achieve their lifetime goals. Currently, he serves as manager for two branches of Securities America, Inc. and offers advisory services through Strategic Advisors of Illinois. Call Morgan's office at 847-729-7700 or visit to learn more.


When you need an expert to speak on complicated financial topics in a clear and concise manner call the advisors at Strategic Advisors of Illinois.

Securities offered through Securities America, Inc. Member NASD/SIPC. Alan Morgan, Registered Representative. Advisory services offered through Strategic Advisors of Illinois. Strategic Advisors of Illinois and Securities America, Inc. are not affiliated.


Share article on social media or email:

View article via:

Pdf Print

Contact Author

Alan Morgan, CPA, CFP®
Visit website