Can You Afford to Retire?

Rising prices are a fact of life. And the average increase over the past 20 years has been 3% per year. If this trend continues, something that cost you $1,000 today could cost $1,340 in 10 years. And the price could go up to $1,806 in 20 years. But these numbers are only averages and do not take into account your unique needs that can leave you especially vulnerable to inflation.

According to the above mentioned government figures, rising prices could possibly affect older consumers more than their younger counterparts. This is because they typically spend a higher percentage of their income on medical care, which increased an average of 5.5% over the past 20 years. Yet some people might think that they will not live long enough after retirement to worry much about higher prices. The experts’ statistics, however, conflict with this outlook. The Social Security Administration’s life expectancy for a 65 year old male is 16 years and 19 years for a female.

Are you concerned that what you've accumulated be enough? Retirees - and those approaching retirement age - share similar concerns about money. A more secure retirement is possible, with smart and prudent financial planning solution to these common retirement worries:

Retirement savings shortfall. Upon reaching retirement, some seniors are surprised to discover that their retirement savings will come up short. Instead of pursuing leisure activities, they find that they must curtail their spending habits in order to make their savings last. But even in retirement, you can put your savings to work for you with investment strategies that are designed to help you achieve your growth and income objectives. For example, do you find that your investments are heavily concentrated in CDs and bank account deposits? Although these investments are often a very good source of liquidity and are insured by the FDIC, an over concentration in these safe investments could expose your portfolio to inflationary risks.

Loss of investment value. If you invested through the stock market correction of 2000- 2002, you may have gotten a taste of what a loss of investment value can do to your financial situation. Unfortunately, market corrections are a fact of life and can show up at any time. However, there are things that can be done to help you weather these storms: 1) diversifying your portfolio, 2) rebalancing your holdings, and 3) following asset allocation strategies designed to reduce your exposure to market risk. Although asset allocation does not guarantee against the risk of loss in a declining market, it can help you to reduce the overall volatility of your portfolio. Has your portfolio been reviewed lately? If not, now might be a very good time to do this.

Outliving your savings. A common worry among many seniors, but one with practical solutions. For instance, buying a fixed deferred or immediate annuity with lifetime income guarantees could help to provide you with a reliable and steady source of cash flow for your retirement. Annuities are long-term investments designed for retirement purposes. Withdrawals of taxable amounts are subject to income tax and, if taken prior to age 59½, a 10% federal tax penalty may apply. Early withdrawals can also be subject to surrender charges. Annuity guarantees are also backed by the claims-paying ability of the issuer.

I always advise people to consult with their own qualified legal, tax, and financial advisor prior to making any financial decisions.

What steps can you take to provide yourself with a comfortable retirement? Please contact me to learn more. If you would like to meet either in person or by telephone, please use the CONTACT US link and let me know.

I look forward to meeting you!