Retirement is one of the biggest lifestyle changes most of us will ever make in our lifetimes. If you’ve accumulated significant assets and feel financially comfortable, you might assume that everything will be smooth sailing… But we urge you to pay attention to these five factors, just to be cautious and informed.
Longevity is increasing. The average lifespan these days has increased to the late eighties. And remember, that is just an average, meaning many of us will live beyond the average – perhaps well into our nineties! That’s great news, of course, but we all must plan for a minimum of twenty years of retirement income. Thirty or so would be even better.
Inflation might be low right now, but it can still affect you. We’ve enjoyed an average inflation rate of about 3 percent per year, since 1982. That’s quite a long stretch of very low inflation! But even at that low rate, your purchasing power will be cut nearly in half after about 20 years. And that’s assuming inflation remains low… We can’t predict that!
Healthcare expenses might shock you. Medicare does not pay 100 percent of medical bills, leaving us to cover the rest. And, in most cases, it won’t pay anything at all toward the cost of long-term nursing care. With the cost of healthcare rising significantly each year, it is easy to imagine that one serious illness or accident could put a dent in anyone’s financial plan. Make sure you’ve investigated the appropriate insurance options, and that your financial plan is adjustable.
Investments can be unpredictable. You’re certainly not new to investing, and you know that nothing is guaranteed. But if you’ve enjoyed relatively good luck over the past decade or so, as many investors have, it can be easy to forget the lessons of the past. So, keep in mind that assets might not grow at the rate you expect for the next 20 or 30 years. Creating a backup plan is always a good idea for everyone.
Taxes can surprise you. Even if you’ve estimated the income taxes you will pay in retirement, and you feel comfortable with that knowledge, the tax code can change from time to time. Who knows what it might look like in 20 years!
We certainly don’t want to cause worry. The point is that we can never assume too much with regard to retirement, so remember to keep your plans flexible and create a cushion just in case something doesn’t go as planned. Keep regular appointments with us, and we can help you prepare for potential pitfalls before they ever occur.