Four Risks to Your Retirement Future
1. Investment Risk - Balancing risk and return takes on a different meaning for individuals as they age. A negative rate of return during the early years of retirement could leave an individual with a significantly smaller nest egg when compared with negative returns later in the retirement life cycle. Your financial advisor can help you craft an investment mix with the goal of smoothing out returns over the long term and increasing the changes that your assets will last throughout your lifetime.
2. Longevity Risk - Withdrawing too much from a portfolio during the early years of retirement may heighten the chance of depleting your assets during your later years. For this reason, many financial advisors recommend limiting annual withdrawals to 5% or less of a portfolio’s value, adjusted for inflation, to make assets last as long as possible.
3. Inflation Risk - Because younger retirees typically are planning for a time horizon of 20 years or more, i ...