After long years of working, saving and planning for retirement, retirement should be exciting… not a source for worry. But many clients I speak to share some of the same concerns: Am I able to retire? Will my money last? What if unexpected medical expenses come up? Can I afford to help family if they need it?
I wanted to address the most common retirement concerns and how planning can help address each one.
1) Will I outlive my money?
This is the most common fear I hear. With longer life expectancies and unpredictable markets, the risk of outliving your savings can be real.
To address this: I start with a retirement income plan that balances spending needs with sustainable withdrawal rates. The sustainable withdrawal rate differs person to person based on each person’s situation, but a general rule of thumb is 4% annually adjusted for inflation.
2) What if healthcare or long-term care costs get out of control?
Healthcare can be one of the largest expenses in retirement, and long-term care can quickly drain assets if not planned for.
To address this: I look at Medicare and supplemental coverage very closely. I discuss long-term care insurance, whether it may fit your specific situation, and specified coverage amounts to consider. For those still working, a health savings account can be used as a tool to prepare for medical expenses in retirement.
3) How can I keep up with inflation?
Retirees living on fixed income may struggle to maintain their standard of living as costs rise over time.
To address this: A diversified portfolio with investments that can hedge inflation helps. I use a bucketing strategy that helps match time horizons to investment risk. A bucketing strategy segments investment assets into three buckets, each focused on a specific time frame. A longer-term portfolio, medium-term portfolio, and near-term portfolio.
4) What happens if the market drops?
Volatility can feel more nerve wracking in retirement when you’re relying on your portfolio for income.
To address this: I design portfolios that reflect your risk tolerance and time horizon, but I also plan for downturns. This can include holding cash reserve, money market, short term bonds and structuring income so that you’re not forced to sell in a down market.
5) Can I help my family and still be okay?
Many retirees want to support children or grandchildren but worry that this will come at the expenses of taking care of themselves.
To address this: Take care of yourself first! Once we know that's covered, we can look at the proper ways to give intentionally to loved ones or to institutions that are important to you.
Financial planning doesn’t end once you retire. It's just a new chapter… But make sure to enjoy it because that’s why you worked so hard to get here!
Ready to learn more? Get started by
requesting a complimentary initial consultation whenever it’s convenient for you.
Read more articles by Ryan Johnson