7 Retirement Horror Stories: What Happens When You Don’t Plan?

We all love a good, scary bedtime story, but when the nightmare becomes your reality, it’s never fun. The following nine stories happened to real people just like you who thought they were doing the right thing when it came time for them to retire. Then one day they woke up to the realization that they got the most important thing wrong. The names have been changed to protect their privacy, but the facts we share with you today to help keep you from making these same mistakes.

#1 He checked the wrong box.

Albert retired from his job in 2004 at the age of 66 and his wife, Irene, joined him. Because of his years in military service, Albert received a pension but his wife did not. He knew they had some investments inside an IRA, and so Albert elected to receive his full pension amount. He checked the box “single life only” and started receiving $2,400 a month. That plus his Social Security and his wife’s Social Security were enough for them to live on. He never spoke to an advisor about his investments because he didn’t think they needed to do any further planning. In 2009 Albert had a pulmonary embolism and died while on the way to the hospital. His wife Irene lost her husband that day, and she lost the $2,400 pension check and a Social Security check. Her income dropped from just over $6,000 a month down to $1,900, a month, and when she looked into their investments, she discovered their portfolio had also lost over 40 percent. Think about your spouse when you think about your plan. The average life expectancy for women is four years longer than men, and in many cases, they are younger than their spouses. If you’ve already checked the wrong box, it’s not too late to seek out a life insurance solution that can help you take care of the people you love most.

#2 They ran out of money.

Jerry retired in 2000 with $1.5 million in his portfolio and a few more bills than he would have liked. He owed $240,000 on his mortgage and he had two car payments, one for him and one for his wife. His plan was to withdraw 4 percent and live off that, but somehow it was never quite enough and he had to take out a little bit extra from time to time. Jerry watched in 2001 as the market tanked and his portfolio went down twice – once from the market loss and again from the $45,000 he took out. When his daughter got married, he took out a little more than that to pay for the wedding and give her a great honeymoon. In 2006 he bought a beach condo in Florida. By the time 2008 came and went, Jerry had only $238,000 left in his portfolio. With his mortgage situation, he would run out of money before he turned 75. Reluctantly, Jerry started working as a door greeter at Walmart so he could pay the bills. There’s nothing wrong with working during retirement if that’s what you want to do. But if it’s brought on by poor financial planning, the stress will likely leave you feeling disheartened. If you’ve saved enough for retirement, you deserve to have a protected income. Let us show you how to get a portion of your income guaranteed so that you don’t risk outliving your money.

#3 She blew it on an RV.

Doris sold her house and retired in 2009 with $400,000 in the bank. She paid $230,000 cash for an RV so she wouldn’t have to worry about any payments and started living her dream. She drove around the country and visited family and friends. After one year, she realized she’d made a terrible mistake. The RV was a lot of work for her to drive alone, just backing into a parking space made her sweat, and the gas and tires were really expensive. She put it up for sale in 2011, but couldn’t even get $60,000 for it. Now at the age of 68, she has $110,000 left in the bank and her entire Social Security check is going towards rent. The day that you retire is the day that most people are in possession of the most money they will ever have in their lives. While it’s tempting to go out and buy your dream purchase, do this one thing first: get yourself a guaranteed income. Retirees who have a guaranteed source of revenue coming in are able to enjoy happier retirements, with or without an RV.

#4 He got greedy.

Oscar enjoyed playing the stock market and he’d done pretty well for himself over the years. In 2001 when his portfolio lost money, he decided to ditch his broker because he thought he could do better on his own. He managed his accounts and even learned how to do some trading online. In 2006 Oscar retired. He went to go see a financial advisor about getting his affairs in order. “You should move some of this money out of the stock market,” the advisor told him. “We can put a portion of it in an annuity so that you can get your income guaranteed.” “No thanks,” said Oscar. “I don’t want an annuity. I can make more money in the stock market.” Oscar did make more money, and he also lost more money. After what happened in 2008, instead of being able to secure a $4,400 a month income, guaranteed, Oscar is watching his pennies, afraid to spend anything because he’s worried about running out of money. Once you lose a large sum of money during retirement, it’s very difficult if not impossible to recover. Loses in the market don’t matter during your accumulation years because you aren’t withdrawing the money. As soon as you start taking money out of the accounts, the risk of market loss becomes real. Like it or hate it, the only way to get a secure income without a pension is by using an annuity.

#5 There was this little red car.

Abby inherited her mother’s IRA the year after she retired. She thought, great! Now I can treat myself to that red convertible I’ve always wanted. Abby cashed in the IRA as one lump sum, took the money, and bought a brand new Maserati GranTurismo for $155,000. She felt like a million bucks when she drove that car out of the lot. A few months later, however, she got a huge tax bill. Not only did the IRA distribution count as taxable income ($200,000 taxed at 30 percent for a $60,000 tax bill), but she also had to pay all the taxes her mother owed on the IRA at once because she’d taken a lump sum distribution. Inheriting a huge sum of money can be both a blessing and a curse. If you have an amount of money from an inheritance that you want to do something smart with, consider the advantages of rolling it into an indexed vehicle that can give you market protection, market-linked returns, and access to tax-free cash. The money isn’t taxed until you actually take it out to spend, so it can save thousands on your tax bill. This is not an annuity, but rather it’s a life insurance product that offers higher capped returns and different investment options. To learn more, GO HERE.

#6 They couldn’t sell their business.

Gary and Ellen were running a business that had been in the family for generations. They also raised three kids, put them through college, and paid off their mortgage. Their retirement plan was to sell the business and live off the proceeds. All of their money was invested in the business, so they didn’t have much in the way of savings. When Gary turned 62, he started having some health problems. Money got tight, and when it became evident that they had to retire early, they didn’t get as much as they thought they would for their business. They also didn’t invest the proceeds correctly. Gary only got to enjoy four short years of retired life, and sadly, due to market loss and tax inefficiencies, the money he left his wife isn’t even enough to cover her basic expenses. Even if your business or real estate investments don’t do as well as you thought they would, financial planners specialize in helping you to maximize your profits. Working with a qualified advisor can be one of the smartest financial moves that you make as you set about planning for your future. Don’t waste money on bad decisions. Act now before it’s too late.

#7 He forgot that he was a human being.

Terry was a bodybuilder, a marathon runner, and a health nut. He did everything right when it came to taking care of his body. When he retired, Terry and his wife, Nora, talked to a financial advisor about their retirement plan. When the advisor brought up the issue of long-term care planning, Terry didn’t even want to address it. “Look at me!” he said. “I’m strong as a bull!” It did seem that Terry was in prime physical condition. Three years later, however, he was diagnosed with neurogenic atrophy, a severe type of muscular degeneration that affects bodybuilders without warning. Terry was no longer able to raise his arms over his head, lift a spoon to his mouth, or get himself out of a chair without help. Because she didn’t think they could afford to hire professional care at home, Nora took care of him. No one realized how physically and emotionally taxing it was for her, and one year after Terry was diagnosed, Nora was being treated for severe depression. A lot of people like Terry and Nora think that planning for long-term care means buying an expensive long-term care insurance policy. That may have been the only option in the past, but today you have more choices. Consider an asset-based strategy that can leverage the investment dollars in your portfolio and be tailored to your preferences. For example, if planning for the income needs of a spouse is your priority, then you can leverage a $500,000 investment by turning it into a $1.5 million death benefit – payable to your spouse tax-free. Fill out our simple form or call us at (888) 440-2468 to learn more. We hope these stories stick with you and inspire you to act before it’s too late. If you’re worried about making the wrong move when making the right move matters the most, meet with a financial advisor or reach out to one of our retirement income experts. If you fear you may have already made a mistake, you owe it to yourself to talk with a qualified planner to find out how to mitigate your losses and get back on track.