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Is Your Nest Egg Cracked?

Elizabeth Brokamp
October 6, 2007

Did you know that your retirement fund is more likely than not to experience a setback? According to the Health and Retirement Study (funded by the National Institute on Aging), in the 10-year period between 1992 and 2002, seven out of 10 adults ages 51 through 61 experienced one of the following:

  • A major medical condition, like cancer, diabetes, a stroke, a psychiatric condition, or heart problems
  • Health problems that forced them to curtail work
  • A layoff
  • The death of a spouse
  • Divorce

This definitely isn't the stuff that retirement dreams are made of. But being aware that the worst can happen -- and preparing just in case -- can work to your benefit. If you're smart, you'll take steps now to ensure your financial nest egg won't completely crack under the pressure of a setback.

To best prepare yourself for a retirement shocker, take these actions now:

  • Invest in disability insurance. The Social Security Administration estimates that a 20-year-old worker has a 30% chance of becoming disabled before retirement age. That's nearly twice the percentage of those same workers who will die before age 65, which means that disability insurance can be even more critical than life insurance for most folks. Check to see if it is offered through your employer; if not, consider securing it on your own.
  • Diversify your skills. Since you last dusted off your resume, the employment landscape may have drastically changed. Take a look at workshops, certificate programs, and work experiences that could substantially enhance your skill set (and marketability) should a job change become necessary. By making yourself more valuable to your current employer, you may even be able to negotiate a higher salary now.
  • Ask yourself the critical question, "Is there a way to use my job skills and experience from home?" You'll want to take a look at how your talents could be channeled into a home-based or online business -- something you could run from home should you be sidelined from your main career by poor health or another calamity. A therapist in private practice may switch over to phone counseling, for example, or a handyman might start a service that checks credentials of service folks, screens them, and then offers referrals -- all of which can be