The best-laid retirement plans often go awry.
Even if you've built a comfortable nest egg and settled into the ideal location for your golden years, a twist of fate could turn your dream retirement into a nightmare. While you can't prevent every threat, you can plan for some of the most common.
Here are five scenarios that can endanger your retirement, plus tips on how to prevent them.
No. 1: "So is anyone using my old room these days?"
Boomerang kids -- grown offspring who return to live with their parents -- can easily reduce the space and serenity you've built into your retirement. But following the Great Recession, many adults encountered hardships that forced them to move back in with mom and dad -- often for an extended period.
Preventive tips: While it's impossible to ensure that your adult children won't run into trouble, setting boundaries with those who ask to return is the best way to manage the situation. Agreeing on a set of rules from the start, such as these guidelines for getting along with your boomerang child, may help you avoid excess costs and disagreements -- and even get your son or daughter back to independence more quickly.
No. 2: "That new hip is going to be a little flimsier than your old one."
Encountering health problems is a natural part of aging. But an illness or injury that forces you to seek long-term care can drain your savings at an alarming rate. MetLife says the average monthly cost of nursing-home care exceeded $3,500 in 2012. Beyond this, the need for long-term care can erode something even more valuable: your independence.
Preventive tips: While staying active and eating well may reduce your risk of requiring long-term care, it cannot eliminate it. Purchasing long-term care insurance is one option for coping, though doing so may not make sense in every financial situation. If you're unsure whether you need it, researching the basics of long-term care insurance is a good start. Since the issue is complex, consulting a financial adviser may also be wise.
No. 3: "As the rightful prince of my country, I humbly request your help."
Internet and telemarketing scams are an unfortunate part of modern life, and retirees are among the most vulnerable to them. Because many seniors have a large nest egg, own their own home and have excellent credit, they can be prime targets for con artists, according to an FBI report on common schemes aimed at seniors.
Preventive tips: If you think you're too wise to fall victim to fraud, remember there are lots of savvy scammers out there who have plenty of experience. MoneyRates.com has compiled tips for avoiding phony bank websites and identity-theft scams, and the FBI report above contains helpful information on many other current frauds. If you fail to uncover information on what you think may be a scam, consult a trusted friend or even the police for their opinion.
No. 4: "I've never seen a foundation sinking this quickly."
People rarely budget for a home disaster, but few homes escape the need for major repairs over time. When disasters happen to you as a retiree, they can erode much of your disposable income -- and then some. A complex foundation repair, for instance, can run upwards of $10,000. If the damage is the result of structural wear-and-tear, these repair costs aren't likely to be covered by homeowner's insurance.
Preventive tips: Following a home-maintenance checklist is a good way to avoid some problems, but older homes in particular can still encounter issues. Home warranty plans may help with appliance replacement costs, which can often be expensive, but these plans don't typically cover structural repairs. A straightforward approach to handling all sorts of issues is to anticipate unexpected costs and adjust your retirement savings plan accordingly. Many experts say homeowners should budget at least 1 percent of their home's original purchase price for annual upkeep -- or about $3,000 on a $300,000 home.
No. 5: "The good news is, not all of your principal is gone."
Investment failures can result from poor money management -- or old-fashioned bad luck. But retirees have to be careful to avoid both of these. While younger people who suffer investment setbacks may have the time and income necessary to ride out market downturns and failed investments, seniors who depend on investment income often don't have that luxury.
Preventive tips: Placing additional money into FDIC-insured vehicles -- such as savings accounts, money market accounts and CDs -- can help minimize investment risks for older workers. While interest rates on deposits are low today, many higher-risk investments haven't performed much better over the long term, making stable investments more attractive by comparison. If the rates at your bank don't excite you, don't give up hope. Recent MoneyRates.com research indicates that some U.S. banks are still paying annual percentage yields close to 1 percent on their savings accounts -- well above the current FDIC average.
Coping with the unexpected
While it's ideally a time of comfort and predictability, retirement can still bring surprises. Accounting for unforeseeable bumps in the road, particularly unexpected costs, is an essential part of retirement planning.
When you're young, setting aside significant funds for retirement can be unpleasant. But when the day finally arrives that you need those funds, you'll be thankful you endured the hardship.
More from MoneyRates.com on retirement:
Is Mom saving enough for retirement?