"Aging is humanity's greatest, most important, and most enduring discovery. The discovery and exploitation of human longevity is what has led to the globe-dominating species we have become." - Dr. William Thomas, M.D.
For most Americans today, retirement begins at around 63 years old and lasts roughly 18 years. After years of hard work, retirees deserve to enjoy their remaining years in a financially stress-free environment. Retirees must have a safe, sustainable retirement income. Several different paths and products that, in addition to your income, should assist your revenue as you near retirement, if needed. No one option is the perfect fit, but with proper guidance and research, you can carve the ideal path for you and your loved ones.
Sometimes, however, threats to your nest egg can arise. It's crucial that you properly maneuver these potential pitfalls, or your hard-earned retirement could be threatened.Inflation
Inflation can take down even the strongest retirement plans. Always keep an eye out for the interest rate in your savings account is paying. With inflation likely outpacing your interest rate, prices on needed goods and services can sneak up on you. This also goes for travel and medical needs.
If you feel like inflation could dismantle your agenda, consider an additional revenue stream like a hybrid annuity.Health
Going beyond medical costs, seniors require more medical attention regarding daily and long-term care. Over time, they can add up and impact your savings more than expected. Remember to keep prescriptions, doctor bills and hospitalization fees all in the forefront of your mind. If these medical issues arise before you hit retirement, consider that you may have to take time off work. This can impact your earnings and throw off your original plans. If a health issue looks like it could hinder you pre-retirement or during, be sure to adjust your plan accordingly.Age
When did you start to plan for your retirement? If you answered with a relatively young age, congratulations. You're putting yourself in a great position. Beginning a 401(k) in your 20s will provide you with a larger and longer return on investment over time. The longer you wait, the less you will have saved. It's as simple as that.
If your company offers a 401(k) plan, take it. If not, start a retirement option on your own. With life expectancies lasting longer, you'll want to have stored away as much as possible.Fees
Let's be real, fees can be confusing, even for the experts. And even when you do understand them, you might find that they are incredibly high! Unfortunately, fees are sometimes an unavoidable aspect of retirement. That's why you need to make sure that your retirement expert is just that. With a proper advisor in place, you will know exactly what you are paying and when.
None of us like fees, but at least you'll know what to expect when a payment is expected.Taxes
Like fees, taxes can be a costly oversight if you make a mistake.
If your plan includes 403(b)s, SEP IRAs, 457(b) plans and/or Traditional IRAs. you'll have to factor in minimum distributions once you reach your 70s. Depending on the sum, you could wind up paying a large portion to the IRS each year. To minimize this risk, consider coversion options that may align with your goals. Other options are out there to consider. As always, consult your retirement professional before making any decisions.Risk/Volatility
The fall of the stock market is a common concern for retirees. Many think that if it crashes as they edge closer to retirement, all their effort goes down the drain. However, your retirement should live out a crash many times over, if planned correctly.
If you find yourself concerned, don't worry, you have options. Bond funds, mutual funds, ETFs and other investment options can lessen your worries. Choosing the right options and investments should make this a minor issue as you approach your later years.