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Retirement Risks
By JLP | January 23, 2007
I was flipping through the February 2007 issue of Kiplingers and found an interesting article that contained a graphic about 3 retirement risks:
- A long life - Normally a long life would be a good thing. However, when it comes to retirement planning a long life means you need a bigger retirement account. According to the article, there’s a 50% chance that at least one member of a healthy 65-year old couple will live to age 92. That means there’s a good chance that one of them could have a 30+ year retirement.
- Inflation - A serious threat to a retiree is inflation. Think about it: at 3.5% inflation, $75 worth of groceries will cost $150 in 20 years. And that’s at 3.5% inflation. Who knows how fast healthcare prices will rise.
- Investments - Without the right balance of stocks and bonds it will be difficult for retirement savings to continue to provide the necessary income. Kiplinger recommends at least 50% of a retiree’s assets be placed in stocks.
One very real risk that they didn’t mention is the cost of healthcare (which I mentioned above) and long-term care. I think every retiree should have a long-term care policy unless they simply can’t afford it.
Thinking about all this makes me glad my wife and I have at least two decades to get ready for retirement.
Topics: Retirement Planning |