6 Most Common Retirement Risks

What to Watch Out For

Balancing Retiremnt Risks There are many risks to a retirement plan - a recent Society of Actuaries survey of those from age 45 to 80 identified these individuals greatest concerns. Below are 6 of those most commonly cited risks.

Investment Losses

According to this recent survey, 56% of workers about to reach retirement age are concerned their investments could lose value in retirement. 47% of these same workers say they are moving their assets to less risky investments as they age and 33% are leaning toward purchasing products or employer plan options that will provide them with guaranteed income for life.

Healthcare Costs

Future healthcare costs have a lot of pre-retirees and retirees worried about how to prepare. 74% are most worried about adequate healthcare and 66% are worried about long-term care in a nursing home or at home. 82% of retirees plan to stay healthy to prevent these problems while 65% have purchased supplemental health insurance to Medicare or are participating in an employer-provided retirement health plan. 32% of retirees saved specifically for the possibility of large health expenses but only 24% have bought long-term care insurance.

Inflation

The purchasing power of your retirement savings will be eroded by inflation over time. It is important to analyze which of the benefits you will receive will be adjusted to keep up with inflation and to make sure you are using other strategies to balance any loss from inflation from your retirement savings and benefits. In a survey conducted by Mathew Greenwald and Associates and the Employee Benefit Research Institute found 69% of retirees and 77% of pre-retirees are concerned about their retirement savings and benefits keeping up with inflation.

Living Longer than Expected

In a recent survey, 62% of retirees and 57% of pre-retirees gave a response that is below the average when asked to estimate how long the average person can expect to live. This does not take into account that many people will live significantly longer than the average life expectancy..

Falling Home Values

One's home is a significant financial asset and often one looked towards supporting retirement. Recent years have changed the way one's home can be looked at as a dependable asset. Diversifying your retirement plans in such a way that takes into account the possibility of assets fluctuating is an important consideration and a good wealth manager can go a long way to insuring other options and providing emotional security.

Forced Retirement

Statistics show that 55% of current workers are intending to retire at age 65 or later. According to these same statistics, 82% of recent retirees left the work force before the age of 65 and 31% retired before the age of 55.

These figures show that health problems, disability, job loss or the need to care for a family member or spouse caused unplanned early retirement for many. This can bring undue stress on one's financial security and should be built into a plan for retirement.


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“The goal of retirement is to live off your assets-not on them”

Frank Eberhart