The Various Risks Retirees May Face

As generations continue to age, a tremendous number of people are retiring daily. However, there are many risks retirees should consider planning for and addressing in order to obtain their dream retirement.

Zachary R. Mersberger, CFA®, CRPC, AIF®

Apr. 13th, 2016

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Employee Financial Education

As the Baby Boomer generation continues to age, an incredible amount of people across the country are retiring every day and moving into the next phase of their lives. Over 10,000 Baby Boomers turn 65 every day and the number of retired Americans is growing exponentially. While many people envision retirement as worry free and full of fun, there are several major risks that retirees must address before they can ride off into the sunset. At Mersberger Financial Group, we try to address many of these major risks in each client’s financial plan before those clients make the significant decision to retire. These risks are as follows (in no particular order):

  1. Longevity Risk – the risk of living longer than expected or projected in your financial plan
  2. Inflation Risk – the negative effect rising living costs have on one’s assets and incomes over time
  3. Interest Rate Risk – when short-term and long-term income instruments have low-interest rates, it can be detrimental to retirees who rely on these instruments for retirement income
  4. Stock Market Risk – the risk of losing assets from stock market volatility
  5. Business Risk – the risk that pension plans, insurance companies, etc. encounter financial problems
  6. Unexpected Health Care Costs Risk – the risk that individuals need unexpected health care (such as assisted living, nursing homes, etc.)
  7. Death of a Spouse Risk – besides the obvious emotional pain this causes the death of a spouse can also cause financial pain as some income sources may be lost
  8. Fraud Risk – unfortunately, retirees/senior citizens become targets of online scams, tax scams, identity theft, etc.

Not looking at how to address these risks before retiring can be a serious mistake that can have negative consequences down the road. At Mersberger Financial Group, our Advisor Team addresses each one of these risks as they build each client’s unique financial plan. There are many other risks in addition to the ones above, however, we have attempted to highlight some of the major risks that we feel every retiree may face at some point. Please contact our office if you have any questions regarding this topic.

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