Watch Your Retirement Risks

retirement

courtesy barberassociates financial

Retirement will bring with it new experiences but also new challenges. The biggest one will be the challenge of having enough money. Every retiree faces the challenge of turning their retirement assets into a reliable source of income. You only have two choices during retirement, financial survival or putting your retirement plans on life support. Understanding financial risks and how to offset them should help you avoid retirement plan life support.

The Impact Of Retirement Risks

Market Loss

You incurred the risks of market loss and inflation before retirement. When you were still working the market went up and down but your apprehension was minimized by the fact that you did not need that retirement money yet.

Inflation

During your working years your concern about inflation may have been a small concern due to the fact that you still had a paycheck to offset any drop in account value. Most retirees overlook the fact that when they are retired, market loss and inflation will be amplified; plus, there will also be additional risks involved.

Your Other Financial Risks

Health Care Costs

If you haven’t already felt the impact of overpriced prescription drugs, nursing home care and long-term care you soon will. The increasing costs of health care is effecting everyone, you cannot escape from it. Be prepared for more of your retirement income going towards paying for your health care.

Income For Surviving Spouse
You want to leave your spouse with adequate income. This can be tricky when the costs of healthcare, housing and insurance are always increasing. You can eliminate this risk quite easily. Income for a surviving spouse can be provided for by the death benefit from your life insurance policy; so be sure to keep your life insurance policy current.

Longevity Risk

Most retirees may go back to work part-time for the sole purpose of self-fulfillment. They do not want to work full-time to support themselves. The most common worry amongst retirees is living longer than their retirement income.

Since there are so many unknown expenses in retirement, the risk of outliving your retirement income may be an ongoing challenge. Balancing your retirement income with your retirement risks should help you outlive your retirement income but will that be enough?

Retirement will be a financial balancing act. To help ease the concerns and worries of financial risks many retirees are buying annuities. Yes, annuities have developed this bad reputation due to the somewhat high fees charged by insurance companies. However, weigh those fees against the other financial risks you may face.

An annuity may cost a bit more but it will give you a foundation of guaranteed income to take care of your spouse and rising health care costs. If the annuity is set up properly you will also outlive the income generated from it. An annuity can also offset market loss and inflation risks.

Retirement is designed to be a pleasant time in your life not a challenging, stressful one. Improve your retirement by making solid financial choices before you take the retirement plunge.