Five Risks to a Successful Retirement
How do you plan for retirement with so many unknown variables that can change from year to year? It’s not as simple as calculating your assets on the day you retire and estimating how much you can spend per year. How much can you grow your nest egg? How many different income streams do you have? How long will it last? What if the markets go down? There are many different risks out there to consider. Here are the five risks that have the most influence on the success of your retirement. The key to a successful retirement is making sure you will not outlive your money.
- Longevity Many people underestimate their life span and risk outliving their assets. What is realistic? What is the worst case scenario?
- Health Care Expenses Rising health care costs coupled with inadequate health care coverage can have a devastating impact on a retirement income plan.
- Inflation Inflation increases the future costs of goods and services and may erode the value of assets set aside to meet those costs.
- Asset Allocation Retirees with a portfolio overly concentrated positions investments expose themselves to a greater risk of outliving their assets. It is possible to be over-concentrated in conservative or risky investments.
- Withdrawal Rate Aggressive withdrawal rates increase the possibilities of outliving your assets. Are you drawing down your account at a sustainable rate?
If you are concerned about outliving your assets, you need to review your portfolio. Don’t just sit back and hope things will be ok. Review your retirement income strategy. Determine whether it is consistent with your current goals. Is your withdrawal rate sustainable? Address your insurance needs. Revise your plan, or create a new plan, that addresses your concerns for the future.
