RETIREMENT RISKS
For many, retirement is the time to finally take a breath and enjoy the fruits of what it’s taken a lifetime of employment to create. It’s a time of freedom from daily work obligations and a time to chart the most fulfilling course.
But it’s also a time of uncertainty and limited ability to adjust when surprise crises hit. A significant financial loss or expense can be catastrophic with less time and fewer opportunities to increase resources. A medical problem can start a cascade of problems and costs that are much harder to recover from.
It’s also a time when even one of the most wished-for aspects of retirement — a long life — is actually one of its biggest risks.
Here are the top financial risks that retirees face:
- Longevity Risk
- Health Risk
- Market Risk
- Tax Risk
Longevity Risk
The biggest risk for any retiree is running out of money before they die. If you retire at the average age of 63 and live until you’re 100, you will require income for 37 years. For many people, this is longer than an entire career of employment. But even if you live just another 20 years, that’s a long time to finance a life.
Outliving your savings is a real concern… Enter retirement with confidence with a guaranteed lifetime income strategy.
Health Risk
According to the 2022 Fidelity Retiree Health Care Cost Estimate, the average retired couple at age 65 can expect to spend around $315,000 on health care expenses in retirement. What percentage of your after-tax savings is that?
As you age, the probability of needing long-term care rises, but a singular event could also result in the need for the care before you even turn 65. Unprepared, many people could find themselves financially devastated, without any retirement savings available to sustain a comfortable lifestyle once they stop working.
You can have a plan in place to help prevent an unthinkable health crisis wiping out your retirement savings.
Market Risk
Most retirement and investment accounts are invested in Wall Street. From a long-term perspective, the returns have been good; however, when we are retired, we don’t have as much time to recover and, since we are no longer working, we are not adding to our accounts. It’s inevitable that some sort of market event will happen two to four times during your retirement. Are your accounts set up to withstand multiple market corrections of 20-30%?
We can help insulate your accounts from this situation so when the market goes down, you know a percentage of your savings will be shielded.
Tax Risk
Whether you have a pension, a 401(k), a 403(b), etc., Uncle Sam always gets his share. Those balances you see on your statements are not what you can spend in retirement. You will typically have to reduce those balances by at least 25% when thinking about your actual spendable income in retirement.
There are tax-free options available that can help avoid taxes as much as possible.
These risks are real, but you have options to mitigate them to very manageable levels: let us help you get it right.