Managing Retirement Risks

by | Oct 14, 2021 | Blogs

managing retirement risks

When planning for retirement, it is always important to consider the unexpected. Any number of retirement risks, including the earlier than expected death of a spouse, a lengthy illness, stock market volatility, and the prospect of outliving your assets, can put pressure on even the most carefully considered retirement plans. No matter where you find yourself on the runway to retirement, it is imperative that you conduct a risk analysis to monitor the adequacy of your retirement assets and evaluate the potential impact on your financial security in retirement.

Financial Retirement Risks

For most retirees, running out of money is the primary concern. Therefore, you should be aware of inflation risk. Anyone living on a fixed income should plan for this, especially as an extended period of unexpectedly high inflation can be devastating. Likewise, you should consider interest rate risk, as lower interest rates can reduce retirement income by lowering the growth rates for savings accounts and assets. On the other hand, increases in interest rates can also negatively impact the stock market and the housing market

Stock market losses can significantly reduce retirement savings, with the sequence of good and poor market returns impacting your retirement. For example, a retiree who experiences poor market returns in the first couple of years of retirement will have a different outcome than a retiree who experiences good market returns. Furthermore, broker fees and taxes will play a meaningful part in the viability of a portfolio to sustain a certain retirement plan.

Personal and Family Risks 

Longevity risk is a larger concern for those approaching retirement today due to the increase in life expectancy. Remember, your average life expectancy at retirement is just an estimate, and many will live longer. While no one should have to worry about not dying soon enough, only about half of today’s retirees will have planned for enough income to live to their projected life expectancy.

Healthcare and Housing Risks

These retirement risks include medical bills, the need to change living situations, and long-term care—including the cost or lack of available caregivers and care facilities. For example, women are far more likely than men to provide care to aging family and friends, and that amounts to an estimated impact of $7,000 per year on retirement savings.

Public Policy Risks

Unfortunately, Public Policy Risks represent a retirement risk category that we have almost no control over. These risks include higher taxes and reduced benefits from Medicare and Social Security. Strategizing to mitigate the impacts of any unpredictable legislative changes, is a great way Having extra money set aside in the event of any unpredictable legislative changes is a great way to mitigate Public Policy risks.

Rest Easy with TriscendNP

While many risks are out of your control, understanding what the post-retirement risks are and considering them in retirement planning is critical. TriscendNP can help you to formulate a Plan B—or even a Plan C—in the event any of these risks arises, so that you rest easy knowing that you and your family will be well taken care of in both expected and unexpected situations.

For more information, call (972) 318-1110 or contact us.

About the Author: Kristie Hartmann

Ms. Hartmann serves as a Senior Executive Benefits Consultant and works individually, and corporately as needed to support the efforts of the Triscend Principals, to collaboratively design and implement high-impact solutions for both prospective and existing clients. Contact or learn more about Kristie >>