For over 40 years working with our clients, these are the 5 major risks we help them avoid when planning for Retirement.
Longevity risk refers to the possibility that you’ll outlive your savings. With retirement lasting anywhere from 10-40 years (perhaps longer depending on how early you retire) this is
a very real issue for many retirees, especially now that most people are relying on their 401(k) and IRA funds instead of a monthly pension check.
Inflation isn’t so much a risk as inevitability. When you’re working, your income typically increases to keep pace with inflation. But after retirement, many individuals are living on a more or less fixed income, and inflation becomes a major factor. Consider this…
Over a 25 year span, 4% annual inflation will devalue a $1,000 monthly pension to the equivalent of just $375.
Rising Healthcare Costs
One other lurking risk factor during retirement is the rising cost of healthcare. This can become even more of a problem if you are no longer covered under the benefits of the company that you were working for. Although Medicare offers some coverage, most retirees with health issues will have to pay a significant sum for their total healthcare bills out of their retirement fund.
Death of a Spouse
Even if two people really can live as cheaply as one (doubtful), one person can't pay all the household bills if her spouse dies and thereby causes Social Security and pension income to drop sharply.
When you’re working, down markets can be overcome. You’re still in the middle of the accumulation phase and, as long as you buy and hold, you have plenty of time to recover. That being said, a down market can wreak havoc if it occurs early in your retirement. The reason for this is that in retirement, you’ll likely start selling assets to generate cash. When you pull money out during a down market, you effectively lock in that loss making it hard to recover.
If you want a higher rate of return, do you have to have some risk?
The question is; does risk increase the rate of return or does risk increase the probability of losses?
Where can you put your Retirement Savings?
Q: How can you profit in an up market, a flat market or a down market?
A: Fixed Indexed Annuity
Q: How can you lockdown, protect and shelter our gains?
A: Fixed Indexed Annuity
Q: How can you be assured of an Income For Life; however long life may be?
A: Fixed Indexed Annuity with guaranteed lifetime income rider
Q: How can you guarantee income for life without giving up control of the Cash Accumulation Account Value?
A: Fixed Indexed Annuity with guaranteed lifetime income rider.