The word “retirement” means different things to different people. Regardless of the vision you have for your retirement, it’s an event that can produce much satisfaction when you have a blueprint for what a successful retirement will mean to you.
Without a plan, however, including an assessment of your retirement readiness, retirement can become a period of anxiety, as you worry about whether your finances can sustain you through a potentially long retirement.
For example, let’s take a look at the top five financial risks you’ll face in retirement:
- Outliving Your Assets: The odds are that you’ll live a long time after retiring. That’s the good news… the bad news is that you’ll need sufficient assets to provide retirement income over a potentially long period of time. The alternative is to risk outliving your retirement income.
- Inflation: With inflation, the cost of goods and services increase over a period of time, meaning that you’ll need more retirement income in order to keep pace with inflation.
- Loss of a Spouse: With longer life expectancies and the tendency to marry men older than they are, women can face a dramatic decline in retirement income at a husband’s death.
- Healthcare Expenses: While Medicare covers many healthcare expenses, retirees need to be prepared to pay for Medicare-related premiums, as well as expenses Medicare doesn’t cover. If you’re planning to retire prior to age 65, you’ll need a way to pay for healthcare expenses until you become eligible for Medicare.
- Long-Term Care Expenses: While there are a variety of long-term care services, ranging from care in the home to assisted living facilities to nursing homes, all of them are expensive. If you or a spouse need long-term care, how will you pay for it?
Any assessment of your financial readiness to retire should take these risks into account, together with an evaluation of whether you can afford the type of retirement you want.
My free “So, You’re Thinking About Retirement?” Life Guide can help you assess your retirement readiness and transition into a successful retirement.