Five key risks to retirement income planning

1. Longevity:  The risk of outliving your savings

We are leading longer and healthier lives, which means twe need to plan for a retirement lasting 20 or 30 years or even longer.  Retirees need investment portfolios capable of keeping up with inflation. 

Even if the modest 2% inflation average of the past 20 years continues, it could erode the purchasing power of retirement income by 40% over a 25-year retirement.

2. Asset allocation: The potential for rising consumer prices to erode purchasing power. 

The 2008–2009 crisis heightened anxiety about the stock market. But historically equities have provided long-term growth that is critical to a retirement plan. A diversified portfolio that includes stocks, bonds and cash helps provide growth and protection against market volatility. This needs to be personalized. There is not one route that works for everyone.

3. Withdrawal rate:  The risk of withdrawing too much from savings and running out of money.

4. Annual inflation-adjusted withdrawals of more than 4–5% of the original value of their portfolio at retirement run the risk of running out of money.

5. Health care: The very real chance that a future illness or disability may impact your savings.

We want to live longer and we want to remain healthy. We also realize that health issues and aging increase the likelihood that at some point we may have an acute or chronic health problem.

There is a need to understand what health care costs are and are not covered by government health care programs, and what their own needs could be, and plan accordingly.

Increase in Aging Demographics and Decreases in Registered Pensions means the individual is more responsible to plan for retirement above the government pensions available.

A written retirement income plan can ease the distress by being mindful of strategies to deal