According to a recent study from Gallup, many Americans don’t feel confident about their ability to fund a comfortable retirement. According to the annual survey about Americans’ financial concerns, 54 percent of respondents are worried about retirement. That’s enough to make retirement America’s top financial worry.1
There could be good reason for these concerns. Many Americans have struggled to save for retirement or to plan sufficiently for potential risks. Below are three surprising threats that could derail your retirement if you don’t plan properly. A financial professional can help you take action against these risks to protect your golden years.
You live longer than you expected.
There’s no doubt that today’s retirees are living longer than ever. According to the Centers for Disease Control and Prevention, a 65-year-old male in 1950 could expect to live another 12.8 years. By 2014, 65-year-old men could expect to live another 18 years.2
A long lifespan is a good thing in many ways. You get to enjoy more years of retirement and spend more time with your friends and loved ones. However, a long life span can also put a strain on your finances. There’s the risk that you could run out of money before you pass away.
There are a few ways you can minimize longevity risk. One is to make sure you’ve accumulated enough assets to fund a retirement that can last multiple decades. Another is to manage your spending so your assets last. You also may want to consider tools such as an annuity, which can generate guaranteed lifetime income.
You face significant health care and long-term care costs.
Health care is a sizable expense area for most retirees. Medicare is a valuable resource, but it doesn’t cover all your medical expenses. There are many treatments that Medicare covers only partially or doesn’t cover at all.
That means you could face a significant amount of out-of-pocket health care costs in retirement. In fact, Fidelity estimates that the average 65-year-old couple will face $280,000 in out-of-pocket medical expenses. That figure doesn’t even include long-term care, which can be very costly.3
You can minimize exposure to health care costs by funding a health savings account (HSA). These accounts allow you to take tax-free distributions to pay for medical expenses. You also may want to consider a long-term care insurance policy to cover long-term care costs.
You have too much free time on your hands.
Free time is one of the most appealing aspects of retirement. However, many retirees soon find that they have too much free time on their hands. They may feel that they don’t have purpose or simply become bored.
The risk is that you fill your free time with costly activities such as travel, shopping or new hobbies. It’s important to enjoy retirement, but you don’t want to blow a hole in your budget in the early years of retirement. You can manage this risk by developing a budget and sticking to it. A financial professional can help you create your retirement budget.
Ready to minimize risk in your retirement? Let’s talk about it. Contact us today at Sprouse Financial Group. We can help you analyze your needs and develop a strategy. Let’s connect soon and start the conversation.
Licensed Insurance Professional. This information is designed to provide a general overview with regard to the subject matter covered and is not state specific. The authors, publisher and host are not providing legal, accounting or specific advice for your situation. By providing your information, you give consent to be contacted about the possible sale of an insurance or annuity product. This information has been provided by a Licensed Insurance Professional and does not necessarily represent the views of the presenting insurance professional. The statements and opinions expressed are those of the author and are subject to change at any time. All information is believed to be from reliable sources; however, presenting insurance professional makes no representation as to its completeness or accuracy. This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, accounting, legal, tax or investment advice. This information has been provided by a Licensed Insurance Professional and is not sponsored or endorsed by the Social Security Administration or any government agency.
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