Many people across different age categories in the United States struggle financially and a sudden illness or a job loss can have a major impact on their retirement savings accounts. These savings accounts are often tapped into during emergency situations because they provide ready cash. However, withdrawing from your retirement account now can have significant long term costs and many people do not realize the extent to which they can affect you.
According to a study by the New School for Social Research, up to 96% of Americans will experience 4 or more income shocks throughout their life. This is defined as a 10% or higher decrease in pay as a result of something like a sudden illness or a job loss. On their own, an income shock won’t have a devastating impact on your retirement savings overall. However, compounded, this could significantly reduce a nest egg. In fact, having poor health ultimately reduces your retirement savings by more than $34,000 and very poor health reduces it by more than $86,000.
Those repeated income shocks can have an impact of a loss of more than $10,000 and reduce savings across your working career. Planning ahead for retirement and thinking about when you will take action to save for retirement as well as buffering yourself against long term care events are all steps that you need to take now before a problem happens.
Consulting with a knowledgeable estate planning attorney in MA is just one thing you can do to sit down and discuss how you will protect the assets you’ve already built and opportunities to pass on those assets to future generations.