“Instead of focusing on risks that we are aware of, we should be turning our focus to risks that we are oblivious to, Walter Updegrave writes in TIME.”
How can you navigate towards a successful retirement? It’s simple, says Wealth Advisor in the recent article, “The Three Risks To Prepare For In Retirement.”
The authors provide three risks you should protect against:
- Complacency. Don't let yourself fall victim to complacency risk. This involves feeling smug or uncritical satisfaction with your own achievements. In this case, it’s thinking that you have your retirement plan all set and forgetting about it.
Instead, conduct a retirement inspection to protect against this risk of complacency. An easy way to review your retirement, is by using a retirement income calculator tool. You can input your information, including the amount that you’re saving annually, and the age you plan to retire. The calculator tool will give you a rough estimate of your likelihood of reaching your goal. You want to have a cushion for unforeseen expenses, like medical costs and long-term care. Therefore, if the results look “just okay,” dig deeper and figure out a way to save more.
- Emotional. This type of risk has the tendency to be highest during periods of market extremes. If you let your emotions influence your investing strategy, it can really damage your retirement prospects.
However, with an asset-allocation strategy, you can manage this risk by setting it and putting it in writing. Many asset-allocation tools leverage financial experts to explain how to choose investments that align with your risk tolerance, time horizon and financial goals.
- Longevity. Planning for retirement can be complex, and there are many components that must be considered. If you underestimate how long you might live, you might outlive your savings.
However, you can be more precise with an actuaries longevity illustrator. This tool is designed to provide you with perspectives on your longevity risk—the uncertainty of how long you and your spouse/partner might live. It will let you appreciate the risks of outliving your economic resources.
Don’t forget to take the time this year to meet with an estate planning attorney and either update your existing estate plan or, if you don’t have a will, Power of Attorney and other necessary items, get yourself an estate plan. This will create a plan for your future and give your loved ones the needed guidance for your possessions and your wishes.
Reference: Wealth Advisor (December 20, 2018) “The Three Risks To Prepare For In Retirement”