Risks in Retirement

CHICOPEE, Mass. (Mass Appeal) The road to a comfortable retirement is full of risks, and they don’t end when you stop working.  Dylan Bond, Owner of Bond Financial Services came onto Mass Appeal to help us avoid risks.

Bond Financial Services
175 Dwight Rd., Suite 301
Longmeadow

 “Are You Prepared for 40 Years Without a Paycheck?”
Upcoming Retirement Planning Seminars

Designed for people 50 and older with questions about retirement income planning.

Wednesday, May 7th &
Wednesday, April 30th
6:00PM
Twin Hills Country Club
700 Wolf Swamp Road, Longmeadow

For more information or to make a reservation call (413) 754-4747 or visit BondFinancialServices.net.

Risks to Consider in Retirement:

Inflation
The inflation rate has been relatively low over the last five years, averaging about 2.25% per year. But even that level can eat into the purchasing power of your savings. And long-term inflation trends have been higher, averaging 2.85% annually over the last 30 years.1 Although you may want to tilt your portfolio toward more conservative investments after you retire, you still might allocate some assets to stocks and other investments that have the potential to outpace inflation. Of course, all investments are subject to market fluctuation, risk, and loss of principal. When sold, they may be worth more or less than their original cost.

Unexpected Events
A recent survey of Americans aged 50 to 70 found that the average respondent had experienced four “derailers” that temporarily knocked them off track in saving for retirement, with an average loss of $117,000.2 This may sound daunting, but setbacks could be mitigated by maintaining an emergency savings fund. When you are faced with an unexpected event, the wisest approach may be to resume saving at the highest rate you can afford when your life returns to normal. You might also have to adjust your spending habits.

Social Security
According to the 2013 Annual Report of the Board of Trustees, Social Security benefits should be fully funded at current levels until 2033, when the trust funds may be exhausted. After that, payroll taxes would be able to fund only about 77% of scheduled benefits.3 Depending on your age, you might need to scale back your expectations for Social Security as a major source of retirement income.

Sequencing
The most complex challenge could be sequencing risk, which refers to the timing of unfavorable portfolio returns, especially in the early retirement years. This could result from adverse market conditions and/or an inappropriate withdrawal strategy.

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