When you’re working to achieve your financial objectives, you will encounter obstacles.


When you’re working to achieve your financial objectives, you will encounter obstacles.



Some of these can be anticipated; for example, you won’t be able to invest as much as you want for retirement because you have to pay your mortgage.



Other challenges come unexpectedly, but you can still plan for them. 



For example, during your working years, be prepared for the following:



• Emergency expenses: Could you pay for a major, necessary car or home repair? What about a temporary job loss? These events are costly — especially if you have to dip into your long-term investments to pay for them. To help guard against these threats, try to build an emergency fund containing six to 12 months’ living expenses, held in a liquid, low-risk account.



• Investment risk and market volatility: Extreme price swings are unpredictable and can affect your investment success. To defend against wild market gyrations, build a diversified portfolio containing quality investments. While diversification alone can’t protect against loss or guarantee profits, it can help reduce the effect of volatility on your portfolio. Maintain a long-term perspective. By doing so, you won’t be tempted to overreact to short-term downturns.



•Long-term disability: One-third of people ages 30-64 will become disabled at some point, according to the Health Insurance Association of America. Disabilities can be economically devastating. As part of your benefits package, your employer may offer some disability insurance, but you may need to supplement it with private coverage.



•Premature death: None of us can predict our longevity. If something happens to you, could your family stay in your home? Could your children still attend college? You need adequate life insurance to protect these goals.



As you approach retirement, and during your retirement years, you may want to focus on these challenges:



•Living longer than expected: You probably don’t think that “living longer than expected” is necessarily a bad thing. However, a longer-than-anticipated life span also carries risk of outliving your money. Some investment solutions can provide an income stream that you can’t outlive. Also, be careful about how much you withdraw each year from your various retirement and investment accounts.



•Need for long-term care: If you had to stay a few years in a nursing home, the cost could be hundreds of thousands of dollars. These expenses could jeopardize your financial security. You could “self-insure,” but as that would be extremely costly, you may want to “transfer the risk” to an insurance company. A financial professional can help explain your choices.



None of us can foresee the future. But you can at least take positive steps to prepare for the unexpected.



Joe Faulk is a financial adviser.