10 Risk Proof Retirement Tips

Watch out for these common retirement threats to your nest-egg.

Follow these risk proof retirement tips:

  1. Longevity Risk: Considered by many to be the single most dangerous risk to retirement today. To mitigate longevity risk, you should be converting lump-sum retirement assets into guaranteed income streams for life. In retirement, our ability to accurately judge life expectancy is inherently difficult due to the wide range of possible outcomes and the many unknown factors (health, accidents, etc.) that can influence it.  This retirement threat acts as a multiplier to all the other risks.

  2. Insufficient Lifetime Income: A sustained period of near zero percent interest rates on safe investments and the evolution from government and corporate pensions to the privatization of retirement accounts has left many people without sufficient amounts of reliable income for life. Retirees today must reconsider what liquidity means in retirement.  What percentage of your nest egg should be in lump investments versus guaranteed lifetime income you cannot outlive?  What is the right percentage of each to ensure you don’t run out of gas and run the risk of outliving your assets?

  3. Inflation: With interest rates at historic lows, inflation is a threat for most retirees. Learning the secrets about the strategies to manage this “silent” threat is invaluable knowledge.  Like un-managed high blood pressure, inflation causes damage that can go un-noticed for too long.  Periods of low interest rates are often confused for periods of “no inflation”.  Inflation is especially threatening to your nest egg due to limited options to replenish principle.

  4. Incorrect Asset Allocation: The proper balance of your assets in retirement is critical. The definition of liquidity in retirement is different than it is prior to retirement.  Why do so many retirement aged people say a stock market correction or rising interest rates is keeping them awake at night?   Learning the right allocation strategies is simple and an important benefit of retirement enlightenment. If you make one change today, increase the amount of guaranteed income from indexed, income annuities.

  5. Rising Medical Costs: Considered to be the threat that can do immediate damage to a nest egg.  Only specialists with state regulated licenses are trained to offer ones that create immediate income during a wellness crisis.

  1. Loss of Spouse & Dementia– Both married couples and single retirees can expect to deal with the real issue of the dementia factor in the aging process. For married couples, the loss of a spouse often compounds these challenges and has proven to be one of the most significant threats facing us in retirement, especially when that spouse has assumed the primary responsibility for managing the retirement plan. Traditional retirement planning methods have been criticized for being too complex and hard to understand.  Leading economists and retirement scholars agree about the retirement strategy that protects our retirement assets against the risks of declining cognitive abilities.

  2. Investment Scams: Be careful. I have very good radar for scams. Feel free to contact me for an opinion.

  3. Fees: Fees and other charges are similar to taxes levied against your investment portfolio. They are disclosed and easy to measure and they add up. Based only on a 1% annual fee, a $1,000,000 equities or bond portfolio will lose $100,000 over 10 years and $200,000 over 20 years to fees.  Alternatively, you do not pay commissions for annuity contracts. The commissions paid come from insurance companies and do not affect your individual contract.

    4. Bad Advice: You know it when you see it. I meet with people in or near retirement every day whose number one objective is “no losses”. At the same time, they’re retirement assets are invested in stocks and bonds. It never hurts to get another opinion and having a team of professionals with different disciplines is good prevention. Just make sure one of them is a retirement income specialist.

    5. Market Losses: IN RETIREMENT, you cannot afford losses. You don’t have income to replenish them and you don’t have the time needed to overcome losses. A fixed indexed, income annuity can keep you invested through index funds with no losses, ever.

    This is just a partial list of retirement threats to your nest egg. The key to security in retirement is to make sure your assets are not vulnerable to any of these threats. It is possible and with the right strategy, you will gain a peace of mind you may not have currently.

    Please call me at 561-869-4500 or email me, Ted Bernstein, about a complementary consultation about your specific needs.