Best retirement savings, insurance and investment strategies

More than a dozen financial advisers recently shared their best savings, insurance and investment strategies to help retirees and preretirees face troublesome surprises in the decades ahead. 

At age 65, your chances of living past 90 are one in four, the Social Security Administration projects. Reaching that milestone could be thrilling—or chilling if unexpected events in retirement leave you short of funds. 

A major risk is the loss of work due to a layoff or ill health. So strengthen your savings and check insurance options.

• Manage: Build an emergency fund of at least one year's expenses in an easy-to-access money-market fund or short-term bond fund. Trim your expenses where you can and use the savings to retire debt.

• Plan: Create a budget based on any estimated income you'll get—from unemployment, severance pay, early Social Security benefits, part-time work—if you have to leave work five years early, says Angie M. Stephenson, a partner at ParenteBeard Wealth Management in Lancaster, Pa.

• Insure: If you're not yet Medicare-eligible, research the monthly cost to extend employer-sponsored health insurance through COBRA. Compare that with coverage you can obtain through new state health-insurance marketplaces. Choose the lower premium; over time, add up to a year's worth of the premium into your emergency fund.

If your employer offers supplemental group long-term disability coverage, buy the maximum available. Typically, a group plan replaces 40 to 60 percent of your salary, and is capped at $5,000 a month. Try to get coverage for up to 80 percent. That invaluable insurance is often too costly to buy outside the workplace.

Read more from Consumer Reports on investing for bigger returns in retirement.

Costs for commuting, work clothes, and lunch will drop off, but expenses might increase for pursuits such as travel and hobbies. A market plunge can devastate your portfolio just when you need it most. And health care expenses not covered by Medicare can cost a 65-year old couple retiring this year $220,000 through retirement, says Fidelity Benefits Consulting.

• Plan: Devise a retirement budget, add 10 percent for unexpected costs, then test it by following it for several months while still working, advises Jerry Love, a certified public accountant and personal finance specialist in Abilene, Texas.

Avoid claiming Social Security until you're at least full retirement age, currently 66. Claiming at that age, instead of at the earliest possible age of 62, can raise your monthly benefit by as much as a third.

• Invest: In your 60s, aim to keep at least half of any individual retirement account rollover you make and your taxable investments in stocks or stock mutual funds. Over time they're your best chance to gain long-term growth and a hedge against inflation, says Grant Moore, a certified financial planner at Savant Capital Management in Rockford, Ill. Consider putting that money in low-cost index funds. With far lower return-sapping fees, over time they outperform similar managed funds.

Having a financial cushion means you'll be less tempted to sell your stocks during a downturn. So expand your emergency fund to cover more than a year of expenses, up to five years, says Jim Wright, a portfolio manager at Covestor, an online asset-management company.

• Insure: Don't sign a waiver on pension documents to get the single life annuity, which pays out more while you're alive but then leaves your spouse in the lurch. To cover what Medicare won't, read our discusssion of Medigap insurance.

Despite planning, changes can often overwhelm your retirement finances. Relatives' needs can quickly swamp your budget. Or a partner's death can devastate a spouse by cutting off his or her pension income—especially if the survivor ends up living far longer.

• Manage: If you own a home with built-up equity, a reverse mortgage can provide a regular income for a surviving spouse. The product is less than ideal because the up-front costs are high and it presents other risks, but it might be a useful last resort for folks who want to stay put. Consider what you can realistically budget toward the needs of your children. Then tell them you're sticking to those limits.

• Insure: Consider longevity insurance (aka a longevity annuity), which provides guaranteed deferred payouts after a certain age that continue to age 100 and beyond. But there's a downside: You'll plunk down a large lump sum at, say, age 65 and get no access to the principal. Adding a survivor benefit can ensure that your family gets access to that sum if you die prematurely. Be sure to shop among policies; the payouts can vary considerably.

• Plan: Talk with an estate attorney about tax-effective ways to preserve your money and property for your heirs.