Making Sense of Retirement Planning

“God forbid you get a stroke or Alzheimer’s or break a hip, and need to go into a nursing home,” says Carlson. “People need to start thinking about long-term care insurance. You can amass a ton of money and then it could all go to paying for nursing care or assisted living.”

If you’re unprepared for such eventualities, your entire savings could vanish. Long-term care insurance may not be a concern for most people starting out, but it should be. Museum worker David Farrell, 58, was wise enough to look into post-retirement health insurance for himself and his wife.

“I knew from my grandparents that if you can’t care for yourself and wind up in an assisted-living facility, they basically take all your money,” David says. “My grandfather amassed a nice savings account—and of course, you always think that you will get a nice inheritance someday, and he would kid with us about us being able to pay for college and things like that—but it all went when he got sick because he didn’t have the proper insurance.”

Another thing to be aware of is that early retirement may leave you in the lurch when it comes to health coverage.

“People who plan to retire before 65 need to pay special attention to the issue of health insurance,” says Ellen Hoffman, who writes a regular retirement column for BusinessWeek. “Many employees will not get any retirement health coverage from their job. Retiring before Medicare eligibility at 65 will require paying for your own health insurance, which could be prohibitively expensive. Also, the cost of Medicare has been rising and is likely to continue to go up.”