Step 5: Retirement Risks
The first four steps will lead you to establishing a retirement plan. They comprise the essential elements of a workable and reliable retirement plan — a vision of your retirement lifestyle, all your finances well-organized, a good sense that your investments are positioned to perform well, and a positive cash flow plan.
Ok, it seems like everything is in place to proceed to retirement, except for one thing – you must ask this very important question:
What can go wrong?
In other words –
What can happen that was not anticipated, or you hoped would not happen, that can cause your retirement plans to go awry?
You can spend all kinds of time planning for what you want and expect to happen, and then hope for the best. But in the real world, things can (and typically do) go wrong. Sometimes these are little things that can be quickly and easily addressed; sometimes these are major problems that can be budget-busting issues.
Regardless, your retirement planning must include a process for identifying and helping you prepare for the what-ifs: What if this happens? What if that doesn’t happen?
So what are the primary areas of potential problems for retirees? This will obviously vary depending on circumstances, but here are the essential areas of risk:
- Stock market volatility
- Healthcare costs
- Long term care
- Tax rate increases
- Longevity risk
- Unexpected events
It’s About Managing Risks
Admittedly, risk cannot be eliminated, but it is possible to successfully manage risk. You want your retirement plan to include ways to minimize the impact of occurrences, so problems that may have been budget busters end up being manageable and allow your plans to stay on track.
At ProIncome Plan, based in Walpole, MA, our process includes ways to “stress test” your retirement planning efforts to determine how your plan would react against changes in important areas of your retirement finances and circumstances. Based on findings and observations, we are able to recommend options to help you manage and minimize the impact of retirement risks.
Contact us today to get started on your retirement income planning!