Retirement planning can be a tricky mine field. How can someone plan for retirement if they don’t know what risks to plan for. Below are the risks that should be considered based on research conducted by Morningstar.
- Longevity Risk- Statistically a couple retiring at age 65 years have a 75% chance that at least one spouse will live to age 86 and a 50% chance that one will make it to age 91.
- Withdrawal Risk- Calculating what rate is sustainable and Managing RMDs (required minimum distributions).
- Market Volatility- Volatility needs to be watched closely and buffers need to be in place to minimize downside risk.
- Inflation Risk- We know that the cost of goods and services continue to rise but one area most people tend to overlook is the cost of health care which is growing at a rate faster then inflation.
- Retiree Spending- Essential versus lifestyle expenses.
- Solvency Risk- What sources of income can you rely on and which ones should you not include as part of the equation for safety net reasons?
- Savings- How much liquidity do you have and are you underfunded on your retirement accounts?
It Is very important that when it comes to your retirement planning you should not be afraid to seek out the advice of a qualified retirement planner to help guide you through these tricky waters.