Are You Protected Against the 5 Threats to Your Retirement Security

By on February 3, 2021
5 threats

Recent studies and surveys show that pre-retirees and retirees fear these 5 threats to their retirement finances most — and with good reason. As you head into retirement, you head into the great unknown, hoping that you have done all that you can to prepare for it.

The level of anxiety is measured by the difference between the lifestyle that you wish to have and the knowledge of savings that you have made! Here is the list of the top 5 threats to your retirement security.

1. Outliving Your Money

The average 65-year-old will outlive their savings by almost a decade, according to a recent study by the World Economic Forum. To determine how much money you’ll need to have saved by the time you retire, a good guideline is the “Rule of 25,” which says you should multiply your total annual expenses by 25. By that measure, to have $100,000 per year (adjusting for minimal inflation) to spend in retirement, you’ll need to save $2.5 million. It’s also important to consider that you may well live longer than you imagine. Studies show that many people tend to underestimate their life expectancy.

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2. Market Risk

Most people have a big portion of their assets in the stock market. While investing in the stock market is a great vehicle for high returns on your investments, if the market falls, so does your investment value. As you near or if you are already in retirement, a fluctuating stock market can have a devastating impact. You’ll be forced to cut back significantly on your retirement lifestyle. You may have to work longer than you planned – possibly much longer to cover the shortfall.

3. Tax Risk

If you’re saving in tax-deferred accounts like 401(k)s, IRAs, and 403(b)s, you have no clue what your tax bill will be. When you start taking withdrawals over a retirement that could last 20 or 30 years. According to the Center for Retirement Research, after the IRS takes its cut, “It’s a very big deal when people realize they only have two-thirds or three-quarters of what they thought they had. If tax rates increase in the long term, you would be seeing even less than before.

4. Health Care Costs Not Covered by Medicare

Even healthy 65-year-old couples face $500,000+ in health care costs they will have to cover out of their own pockets.

5. Policy Change Risk

These may include cuts to Social Security benefits and increases in the taxes retirees must pay on their benefits.

Solutions to counter the 5 threats

To bypass all of these risks, you can apply some of these methods as a solution.

  • Guaranteed, predictable growth and retirement income
  • Funds can be accessed tax-free, under current tax law
  • Income from these plans does not cause your Social Security benefits to be taxed. They won’t hike your Medicare premiums, unlike 401(k) and IRA withdrawals
  • Guaranteed lifetime income options are available ensure you won’t outlive your money.
  • Can be structured to provide money to cover costs of care for chronic and terminal illnesses
  • No changes can be made to these plans unless you agree to them
  • Peace of mind and long-term financial security

You can stop worrying about when another market crash will wipe out 50% or more of your savings. Speak to a financial advisor about these strategies to ensure your positive growth and secured retirement.

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Are You Protected Against the 5 Threats to Your Retirement Security