Step 4.  Evaluating Retirement Risks

Life expectancy:  With longevity increasing, which is a good thing, a retiree must start with a larger nest egg than in previous decades.  For planning purposes, your life expectancy assumption should be 95 years.  Selecting a conservative (long) life expectancy helps you determine if you have saved enough resources to retire comfortably.

Inflation Risk:  Plan on increasing your retirement income by at least 3% each year so that you have constant purchasing power in the market place. Some of the income may be derived from the sale of securities.

Market Risk:  The price of a security, bond, or mutual fund may drop rapidly and stay low for a long period.  Market risk is caused by investor reaction to tangible and intangible events.  Market risk is caused by factors independent of a particular security.  For example, political, economic and social events sometimes trigger market events. 
 

Continue with Step 5.  Understanding Health Care Issues

Email your questions to info@threebearings.com