Any post-retirement individual may wonder, at times, about the safety and security of their future. Even though many people feel that they took the proper steps to secure their financial future in retirement, many individuals still face threats to their wealth management planning.
The biggest threats to security post retirement are health care costs, market volatility, inflation, death of a spouse, and depleted savings.
To learn more about these and other potential risk factors for individuals in retirement, M & R Capital Management discusses below where a retiree’s financial health could be at risk.
Health Care Costs
Potential unforeseen health care costs can have a major impact on the stability of the future for an individual in retirement. Health problems can arise seemingly out of nowhere, and should be planned and accounted for, even if there are no signs of them occurring.
Medical surprises can take a huge financial toll on an individual in retirement. A large medical expense can eat away years of savings and can cause financial instability.
If an individual has invested money in stocks, market volatility can come into play for someone in retirement who does not have income coming in on a regular basis.
Maintaining a diverse portfolio and adding more bonds is a good idea to combat the potential market volatility that can be experienced while investing during retirement.
Death of a Spouse
Experiencing the death of a spouse is another potential financial risk factor that can come into play in the lives of people in retirement. Experiencing the death of a spouse may make it harder to pay monthly bills, especially if bills were split, or there was a dependence on the spouse’s pension.
Funeral costs can also be surprisingly expensive and may come as a shock to some individuals in retirement, so they should also be planned and accounted for.
Inflation is another potential problem for people in retirement. Especially in recent years when the price of living has gone up, and the retiree is no longer receiving cost of living increases from an employer.
Fight inflation by investing in stocks and utilizing other assets such as Treasury inflation protected securities (TIPS) or Series I series bonds.
Running out of money is another potential problem for someone in retirement. Many individuals in retirement may not account for potential problems that they could run into, and therefore may not have set aside enough money in savings, or they underestimated the amount they believe they need to live on.
Combat this issue by focusing on saving more money while still working and investing in stocks that pay a dividend or return. M & R Capital also suggests buying an annuity and or delaying Social Security payments.
There are several ways that can protect assets and savings even in retirement. Do the appropriate research and choose a secure retirement where funds can be withdrawn whenever needed without penalty. This is a huge financial benefit in the long run, as an individual will not be penalized if an unforeseen financial problem comes up in the future of retirement.