As baby boomers approach retirement, many may find themselves in different economic circumstances than they planned. While some events are out of anyone’s control, such as worldwide pandemics, careful planning can help soften the impact of economic turndowns. Your retirement plan can stay on track if you focus on these six key risks when planning for the future.
• Longevity Risk:Americans are living longer and longer. There’s a 50% chance that a 65-year-old today will live to age 88 if male and 90 if female. Unless you’re realistic about how long you may live, you may be putting yourself at risk of outliving your retirement savings.
• Market Risk: Participating in the stock market can give your retirement savings and income the potential to keep pace with inflation. However, volatility in investment markets can significantly impact how long your money will last.
• Inflation and Taxes Risk: With inflation reducing purchasing power and taxes impacting liquidation strategies, less money will be available to spend or invest in retirement planning. Plus, all the money you’ve been putting away in tax-deferred accounts will be subject to tax when you begin taking withdrawals in retirement.
• Health Care Risk: Rising medical and prescription drug costs, fewer employer-sponsored retiree benefits, and limitations of Medicare are all impacting income and retirement savings. According to Medicare.gov, estimated health care costs for a 65-year-old range from $3,000 for someone in excellent health to $10,000 for someone in poor health. While that amount includes premiums, deductibles and copays, it does not include long-term care, vision or dental expenses.
• Long-Term Care Risk:An unexpected event or long-term illness not covered by private insurance or Medicare is requiring more Americans to deplete their assets prematurely. Someone turning 65 today has an almost 70% chance of needing some type of long-term care in his or her lifetime. According to the U.S. Department of Health and Human Services, those services are typically not covered by Medicare, Medicaid or even health insurance.
• Legacy Risk:Many Americans want to leave a legacy and make an impact beyond their lifetime with a financial gift to a loved one or a charity. It is necessary to balance this desire with the need to fund an individual’s retirement.
With your retirement at stake, these risks can seem overwhelming. But you don’t have to go it alone. Working with a trusted financial professional will help you keep these risks in mind as you approach retirement, keeping you on track toward the future you’ve always envisioned.
LiveWell Capital is located at 3805 Edwards Road, Suite 200, Cincinnati, Ohio, 45209. For more information, visit livewellcapital.com or call 513-366-3618.
Ben Beshear, Timothy C. Miller, Andrew J. Scarpitti, David M. Schimberg, and Bradley Scott Weeks use LiveWell Capital as a marketing name for doing business as representatives and insurance agents of Northwestern Mutual. LiveWell Capital is not a registered investment adviser, broker-dealer, insurance agency or federal savings bank. Northwestern Mutual is the marketing name for The Northwestern Mutual Life Insurance Company, Milwaukee, Wisconsin, and its subsidiaries.