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Planning for Three Common Risks in Retirement

It is the hope of the majority of investors that once you reach retirement age, you have acquired enough wealth in order to be comfortable during retirement. Without a continual stream of income from your monthly paychecks, however, it takes diligent planning and discussion with your financial and tax professionals to be able to make your retirement savings last. But even with careful consideration, there is always risk involved, especially as life expectancy increases or something unforeseen happens, such as retiring earlier than planned. Here are some common risks that investors may face in retirement - and how you can plan for them.

Outliving Assets

As of 2021, research indicated that the average life expectancy for a person living in the U.S. was 76.4 years, but many older adults live well into their 80s and 90s. Assuming you retire at the age of 65, you need to have funds allocated to maintain your desired lifestyle for at least 15 years. And if you live longer than you monetarily planned for, you face a common risk in retirement: running out of money. While you don’t want to subject yourself in your retirement years to living too frugally, you also don’t want to overspend. To mitigate the risk of outliving your assets, consider adding bonds or annuities to your portfolio mix. If possible, also take into account any liquid assets that may be available to you.

Loss of Spouse

Women continue to outlive men in the U.S., but losing your spouse can be one of the hardest risks encountered in retirement. In addition to dealing with grief and navigating new territory on your own, you may also lose out on a source of income you depended on to ensure your retirement savings lasted. According to AARP, widowed individuals not only lose Social Security benefits, but they also may experience a tax increase due to the change in filing status from “married” to “single”. Additionally, you may spend more money in widowhood than you planned for, as you adjust to your new reality. As the surviving spouse, there are steps you can take to help navigate your financial situation in your time of loss. 

Healthcare/Long-Term Care

It’s likely that the longer you live, the more healthcare or long-term care difficulties you will encounter. Although medical costs for general healthcare and insurance premiums can be factored in to some extent, retirees have no way of knowing if or when they or a loved one will get sick or will need more serious or long-lasting medical care. Increased costs occur if one spouse needs to move out of the home in order to get the care they need. In addition, if a family member becomes ill, you may need to help care for them or assist them financially which may affect your retirement savings. Thinking about healthcare and long-term care options require careful consideration of insurance policies and coverage to help offset costs and assist you and your loved ones when you need it most.

Discuss and Plan for Retirement Risks with Chatterton and Associates

Common retirement risks can affect anyone at any time, so it’s important to be as proactive in your retirement planning as you can be to prepare as much as possible. Chatterton’s financial advisors will discuss your retirement goals as well as review your estate planning wishes in order to account for the unexpected.


The Team at Chatterton & Associates

Although the information has been gathered from sources believed to be reliable, it cannot be guaranteed. Federal tax laws are complex and subject to change. This information is not intended to be a substitute for specific individualized tax or legal advice. Neither Royal Alliance Associates, Inc nor its representatives provide tax or legal advice. As with all matters of a tax or legal nature, you should consult with your tax or legal counsel for advice.

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