Two of the biggest threats to a secure retirement portfolio, according to financial planner John Spoto, are inflation risk and market risk.
• Inflation risk is the effect of the long-term rate of inflation on your retirement portfolio. Spoto says that even at the long-term historical (1926-2008) average of about 3% per year, our purchasing power will be cut in half in 25 years.
• Market risk in a retirement portfolio is the combination of poor investment returns and withdrawals from retirement accounts. While both inflation and market risk are unpredictable and uncontrollable.
John Spoto says they can be anticipated and planned for when constructing the right retirement and distribution plan.