When you are considering retirement, there are many risk factors that come to mind. At this point, everyone is all too familiar with stock market risk. But what are the other risks? The following three risks could potentially ruin your retirement: unexpected health-care needs, possibility of portfolio failure, and unexpected family events.
- Unexpected health-care needs and costs – Are you planning ahead for unexpected health care costs? Due to inflation, and rising health care costs, insurance coverage could be one of the largest expenses in your retirement. Americans are living longer and there is always the possibility of a physically disabling event to occur. Make sure you take into consideration the many options available to you including hybrid insurance policies, long-term health plans, and Medigap policies.
- Portfolio Failure – How long are you planning to live? Will it be longer than your investment income will last? There are many theories on how much you should save but none is fool-proof. There is the 4% rule which suggests that if you maintain a portfolio consisting of 60% bonds and 40% equities, you can take 4% of your total portfolio each year. However, based on low-interest rates and market volatility reports have shown this plan has a 50% failure rate. Another theory is to guess how long you’ll live and divide your savings by 20 to 30 years—but what happens if you live longer than that? A long term withdrawal strategy is key for a successful retirement.
- Unexpected Financial Responsibility – Family financial pressures have a tendency to pop up uninvited. This generation of retirees often find themselves providing for grown children and aging parents at the same time. In addition, loss of a spouse needs to be considered in your retirement plan. Tax bracket changes, Social Security and/or pension payment changes could have a large impact on your retirement income. It’s important to have a flexible financial strategy.
The foregoing information, which is all publicly available, is being provided by The White Law Group. The White Law Group, LLC is a national securities fraud, securities arbitration, investor protection, and securities regulation/compliance law firm with offices in Chicago, Illinois and Franklin, Tennessee. For information on the firm please visit www.whitesecuritieslaw.com.
For a free consultation with a securities attorney, please call The White Law Group at 1-888-637-5510.