4 Risks That Can Impact Your Retirement

Even with careful planning and diligent saving, some parts of retirement planning are out of your control. Factors like longevity, rising medical costs and the ups and downs of the market can have an impact on your savings. But while you can’t plan for the unexpected per se, there are ways you can manage these risks and protect your retirement income. Here’s a look at four common retirement risks and how to address them. 

1. Longer life expectancy

Americans are living longer now than ever before. Government figures put average life expectancy at about 79 years old, but you could live much longer than that, and financial experts suggest planning for retirement living costs well into your 90s.

There are many benefits to living longer, but it also means carefully considering strategies to avoid outliving your savings. One strategy to consider is to delay the age you start collecting Social Security benefits. You are eligible to start collecting Social Security at age 62, but the longer you wait, the larger your benefit will be. For example, if you turn 62 in 2021, and you can hold out claiming your benefit until age 70, you’ll increase your monthly payment by 77 percent. 

You may also want to consider other sources of regular income, such as annuities to supplement Social Security benefits and withdrawals from retirement accounts. You typically purchase annuities with a lump sum, and the annuity then makes regular payments to you over a fixed period of time. That said, annuities come with unique trade-offs and risks. For example, it’s possible inflation could rise higher than an annuity’s guaranteed rate. What’s more, annuities are generally illiquid investments, meaning your money will be tied up for a set period and you won’t be able to access it without facing stiff penalties. Discuss annuity options with a financial advisor before adding one to your portfolio. 

2. Medical costs and long-term care

Another implication of living longer is increased health care costs. On average, a healthy 65-year-old couple can expect to spend more than $300,000 on health care alone in retirement. While Medicare covers many medical expenses you’re likely to face, it doesn’t cover everything, including the cost of long-term care. 

Long-term care refers to assistance needed for daily activities, like eating, bathing or dressing. This type of care can be provided at home or at an assisted living facility like a nursing home. Those age 65 and older have a 70 percent chance of needing some form of long-term care as they age. 

Even if you don’t anticipate needing long-term care anytime soon, it may be worth considering long-term care insurance now in case you need these services in the future. Consider purchasing coverage well before you retire as it typically becomes more expensive as you age. 

3. Market risk

Market fluctuations are a natural part of the market cycle, yet a downward turn right before retirement can lower the value of your investments just when you need them most. As you near retirement, consider rebalancing your portfolio to include more lower-risk investments like bonds that are less likely to be affected when stock markets head south. 

4. Rising inflation 

Inflation reduces your spending power and can have a big effect over a 30-year (or longer) retirement. There isn’t much you can do to stop inflation, but you can purchase assets that protect against some of its effects. Real estate investments are one option, as property prices tend to rise with inflation. You may also consider Treasury Inflation-Protected Securities (TIPS), which offer a fixed interest rate, but their principal is adjusted for inflation 

Understanding these risks to retirement can help you know how to address them and keep your savings on track. 








*This information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete. Any information is not a complete summary or statement of all available data necessary for making an investment decision and does not constitute a recommendation. This material was created by The Oechsli Institute, an independent third party that is not affiliated with Raymond James.

*The website link included is provided for information purposes only. Raymond James is not affiliated with and does not endorse, authorize or sponsor any third-party web site or their respective sponsors. Raymond James is not responsible for the content of any web site or the collection or use of information regarding any web site’s users and/or members.

*Any opinions are those of the author and not necessarily those of Raymond James.

*Please note, changes in tax laws or regulations may occur at any time and could substantially impact your situation. While familiar with the tax provisions of the issues presented herein, Raymond James financial advisors are not qualified to render advise on tax or legal matters. You should discuss any tax or legal matters with the appropriate professional.

Investing involves risk, including the possible loss of principal and fluctuation of value. Past performance is no guarantee of future results.

This letter is not intended to be relied upon as forecast, research or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy. The opinions expressed are as of the date noted and may change as subsequent conditions vary. The information and opinions contained in this letter are derived from proprietary and nonproprietary sources deemed by Roush Investments, LLC to be reliable. The letter may contain “forward-looking” information that is not purely historical in nature. Such information may include, among other things, projection and forecasts. There is no guarantee that any forecast made will materialize. Reliance upon information in this letter is at the sole discretion of the reader.

Please consult with a Roush Investments, LLC financial advisor to ensure that any contemplated transaction in any securities or investment strategy mentioned in this letter align with your overall investment goals, objectives, and tolerance for risk.

Additional information about Roush Investments, LLC is available in its current disclosure documents, Form ADV and Form ADV Part 2A Brochure which are accessible online via the SEC’s investment Adviser Public Disclosure (IAPD) database at www.adviserinfo.sec.gov, using SEC # 151288.

Roush Investments, LLC is neither an attorney nor an accountant, and no portion of this content should be interpreted as legal, accounting or tax advice.