5 Retirement Risks to Avoid
Today, retirement lasts anywhere between 20 to 30 years, which means planning and saving for a long retirement is all the more important. Did you know that 45 percent of Americans have saved exactly nothing toward retirement? Having a well-built income plan is essential to make income last throughout those retirement years. Below are 5 risks to avoid when it comes to creating your retirement plan.
- Market Volatility Risk: Building flexibility into your portfolio with different types of accounts allows you to choose where to draw income and some investment options can be less vulnerable to market volatility.
- Longevity Risk: There is a greater risk of running out of money during retirement due to increased lifespans. Only 22 percent of workers are very confident they will have enough money in retirement. Relying on Social Security is rarely sufficient to support income needs.
- Health Care Cost Risk: The average 65-year-old can expect to pay $220,000 for out of pocket health costs and Medicare on average only covers 62 percent of a typical retiree’s health care costs. One option to consider may be to set aside money in a tax-favored HAS.
- Inflation Risk: At a conservative 3% rate of inflation, you will need a plan to double your income in 20 years, just to maintain your current standard of living. Bond laddering, maintaining an equity portfolio and creating a balance between conservative investments and fixed-return vehicles can help to mitigate inflation.
- Long-Term Care Risk: The cost of long-term care is steadily increasing, in fact, the annual projected growth rate for health care spending is 5.8 percent through 2020. A recent study said that approximately 70 percent of people over the age of 65 will need some type of long-term care and support during their lifetime.
Have you taken these risks into consideration when building your written retirement income plan? If not, you are welcome to call us (775) 853-9033 to schedule your complimentary Complete Planning Review.