Manage Risks During Retirement


Losing your investment capital
With a well-diversified portfolio, market fluctuations aren’t a major concern during your income-earning years. But if the market suffers a serious loss just before retirement, you could be left with a smaller nest egg to draw from in your golden years. That’s why it’s important that you and your financial advisor work with a retirement specialist to protect your savings.

As your primary goal shifts from building assets to generating income, you’ll want to update your investment strategy accordingly. Assuming your plan is well-suited to you, drastic changes won’t be necessary. Your appetite for risk will likely lessen, and you’ll want a greater proportion of your portfolio in low-risk or guaranteed investments.

Outliving your money
One of the biggest risks to hedge against is that you’ll outlive your assets. People are living longer, healthier lives and you want to make sure your money lasts as long as you do.

Inflation Risk – Maintain your standard of living in tomorrow’s dollars
Over time, the purchasing power of your dollar decreases. Given that your retirement could last 30 years or more, inflation can really affect your lifestyle.

How much will you need?
While there’s no definite answer, most financial planners estimate you’ll need about 60% to 70% of your pre-retirement income to maintain the same standard of living in retirement. Why?

  • You’ll no longer be saving
  • You may not have employment-related expenses

Again, this number will be different for everyone. It depends on what you intend to do with your life in retirement; this will drive your particular income requirements.

Personal Finance Tip – We can give you a customized income target and outline the steps to get you there. You can also check out this handy calculator to get an idea of the amount of income you’ll need:
Retirement Income Calculator

Health Care Costs
It’s very possible that a substantial portion of your retirement income will go toward health care costs.  While it’s difficult to predict how much of your additional savings should allocate to health care, it’s unwise to ignore this potential problem.

  • Disability How much is coverage is enough? Try this handy calculator
  • Critical Illness
  • Long Term Care
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