There is a 50% chance either a husband or his wife wife aged 65 will live to 90 and a 25% chance one will reach 94. Therefore, couples need to plan for the real possibility they’ll need 25 or 30 years of post-retirement income.
2.) Inflation Risk
Annual inflation of 2% that’s been in place the last two decades will erode the purchasing power of a retiree by 40%, assuming 25 years in retirement. Inflation could be higher and erode savings much faster.
3.) Asset Allocation Risk
History shows equities provide the long-term growth that is needed to provide retirement income. To protect against volatility while still generating growth, retirees need a diversified portfolio that includes stocks, bonds and cash.
4.) Withdrawal Rate Risk
Stock market volatility shows the need for conservative rates of withdrawal to avoid running out of money before you run out of life. Outliving your investments rises with annual inflation-adjusted rates over 4 to 5% of the original value of a portfolio.
5.) Healthcare Risk
In 2010, a Fidelity survey highlighted retiree concerns about healthcare costs beyond what is covered by government or private insurance. 39% of retirees believe such costs could deplete their savings and lower their standard of living. Finwiz.
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