Prepare for Retirement

Three Keys to Disaster-Proofing Your Retirement

How to Manage Risk for Your Retirement Finances

This summer and early fall we have been bombarded by natural disasters. From the hurricane-driven flooding in the Houston area to the devastation in Puerto Rico and the Caribbean to the destructive fires in California, we seem to be living through a disaster movie. Even though most of us have not been impacted directly, these disasters still cause us to worry about how we would react if catastrophe struck.

For retirees, worries about catastrophes usually involve money more often than fire or flood. Managing finances after retirement uses a different set of rules than investing before retirement because you are no longer accumulating; you are spending and decumulating. You lose the steady cash flow of earnings and have less time to correct mistakes. Let’s look at three basic rules for disaster-proofing your retirement finances so you can avoid having to escape financial mishaps with only the bare essentials.

1. Guard Your Necessary Income

Just as you should know what household essentials to grab if you need to evacuate quickly, retirees should know how to protect their financial essentials. One of the biggest mistakes retirees make is assuming that they can count on fluctuating investment earnings to cover fixed, basic expenses. They risk leaving themselves vulnerable to market changes.

The most important rule, then—and the fastest way to gain financial peace of mind—is to guard your necessary income. Know how much you need to spend each month for basic monthly expenses and those necessities that recur routinely. Make sure that you will have a guaranteed or stable source of income to cover those expenses, regardless of what the stock market does. This income should come from Social Security, pension, annuities, or other stable sources, but not from the stock market.

2. Have a Contingency Plan

Hurricanes Harvey and all his friends taught us that we rarely prepare for worst-case scenarios like 1,000-year flood levels. Most retirement planning fails this test, too. People usually consider best-case scenarios—the income they will need in normal situations, the return required to achieve certain goals—while ignoring worst-case scenarios such as lengthy illness, sudden financial changes, or the sudden death of a spouse.

We’ll never know what life and property loss might have been avoided if Houston had anticipated the possibility of harsher storms and five feet of rain. But you don’t have to leave your finances up to the whims of chance. Stress test your financial plan to see if it will hold up when disaster strikes. Build in contingencies and don’t assume that everything will stay high and dry.

3. Don’t Put Yourself in Danger

Many Houston flood victims unknowingly built their homes in flood-prone areas. They didn’t know they were in danger until disaster struck. With retirement planning, we often do the same thing by being unaware of the rules. Saving for retirement is based on three interrelated variables: time, risk, and rate of return. These three factors work together in a predictable system: If we give ourselves plenty of time to save, we don’t need to take as much risk. If we delay or need to catch up quickly, we often take higher risk to get higher returns.

But good returns are also possible without added unnecessary risk—as long as we manage time and don’t put ourselves in situations where a high return is necessary and assumed. The winds of change could blow through at any moment. Before you build, be sure to consider what will happen if that financial dam breaks. Will you be on high ground or in need of a rescue?


You can’t control which disasters will hit; you can only control how you prepare. Retirees who want peace of mind will prioritize preparedness. If you want to learn more ways to prepare, check out my book The Encore Curve: Retire with a Life Plan That Excites You. The second half is filled with preparation tactics in more detail.


About the author – Andy Raub is known as “America’s Encore Coach” because of his passion to help retirees repurpose their lives and reorganize their money. Andy is the author of the new book The Encore Curve – How to Retire with a Life Plan That Excites You and the founder of the Encore Curve Program. See how The Encore Curve process can help you clarify your life and simplify your money at

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