Hey, we know reaching your retirement goal isn’t easy. In fact, it’s probably harder today than ever. Below are 7 huge risks to your retirement with solutions to overcome those risks courtesy of Katherine Reynolds Lewis.
1.) Living Longer
If you’ve already made it to age 65, chances are that you’ll make it to at least 81 or 83. Better to plan to live until 100 and rest assured that you can maintain your quality of life.
Even with a low rate of inflation like 3%, you’ll lose half your purchasing power within 20 years if you don’t take steps to offset it.
Choose a mix of investments that includes a healthy mix of stocks, bonds, commodities and real estate. Hold enough cash to cover unexpected events, but not too much – remember that its value falls over time.
3.) The Market
The best answer to market risk is to spread it – your stock portfolio should include a combination of value, growth and dividend-paying investments.
4.) Irregularly Maturing Investments
Investments can mature at inconvenient times. The answer is to stagger and mix maturity dates so that they come due at regular intervals.
5.) Poor Returns when Markets are Down
Holding 2 years’ worth of living expenses in an account helps avoid being forced to sell your stocks when prices are low. Draw from this account when markets are down and sell more of your stocks when markets are up.
Don’t ignore the risk of cognitive decline. Educate yourself now and make sure you have good financial professionals in your life – plus what they are paid and what incentives they have.
There’s the risk of changes to the tax brackets or the tax code generally. Find a good adviser who understands tax implications and can help you withdraw money from investments with minimal taxes.