Don’t Let Retirement 'Derailers' Ruin Your Nest Egg


No matter how much we plan and try to stay organized, life doesn’t always follow suit. The car breaks unexpectedly, you need a new roof, children need unforeseen medical treatment, whatever the reason, it can be hard to save for the short term--let alone--retirement.

Retirement “derailers” can make a big dent in your retirement portfolio. Most Americans are hit by at least one unexpected "financial derailer," according to a recent Ameriprise financial survey of Americans ages 50 to 70 with $100,000 or more in investable retirement assets.

"The derailers we discovered in this study could throw a wrench into anyone’s retirement plans," says Suzanna de Baca, vice president of wealth strategies at Ameriprise Financial. “Unfortunately, the chance of being hit by at least one of these risks is extremely high."

To help keep boomers’ retirement planning on track no matter what life throws at them, de Baca offers the following savings strategies to maintain a nest egg.

Boomer: What did the survey find regarding why Americans are so ill-equipped to fund their retirement years?

de Baca: The Ameriprise Retirement Derailers survey found that while Americans overall are very optimistic about their road to retirement, life events can and do happen to everyone and those events can have a significant impact on an individual’s retirement savings.

The survey underscored the importance of expecting the unexpected and planning for them in advance so that when these life events do happen, consumers are able to withstand them much better.

Boomer: What is a retirement derailer?

de Baca: We define derailers as events that can have a significant financial impact on a person’s retirement accounts. Events like a low-interest rate environment, a job loss, divorce or even adult children moving back home can all impede retirement savings.

Boomer: The survey identified certain specific issues and events that have made reaching financial retirement goals more difficult, what are the main obstacles?

de Baca: It wasn’t surprising that the top three derailers were directly related to the recession. But there were a number of derailers reported that could happen in any market environment or were the result of poor choices.

For example, a quarter of the people surveyed said that providing financial assistance for a grown child or grandchild had a significant negative impact on their retirement accounts. And others said that they just didn’t start saving early enough and others cited bad investment decisions. So, we know these derailing events are a combination of things that are beyond our control as well as choices we have made.

Boomer: What are some regrets on not saving enough and a few ways of getting back on track?

de Baca: There are really three options for getting back on track: work longer, save more or spend less. Working longer is not always in our control, so people should focus on saving more and spending less. If you aren’t retired yet, you have the ability to contribute more to your retirement accounts and to try and get back on track. You also have the option of cutting back your spending and really taking a hard look at where your money is going. The choices are not always easy, but tradeoffs can generally be made to help you achieve your financial goals.

Boomer: How does putting retirement plans in writing help pave a smooth path to financial retirement?

de Baca: Many people are goal oriented. Having a written financial plan gives you a road map to follow to achieve your goals and it helps hold you accountable to the actions required to meet those goals. That written road map can make the journey to retirement much easier. We know from past surveys that those with written financial plans feel much more confident about their ability to retire.