The Wheel of Worry

Risks that can Ruin your Retirement Plan

Ah, retirement! The time of your life! Or maybe not. reporter Sheyna Steiner called to ask about the big risks that could wreak havoc on a retirement plan.


Market Risk

Like death and taxes, market risk is virtually inescapable. Unlike the former, you can opt out of the stock market, but you do so at your peril. 

The best way is to diversify into different markets — all these markets don’t move in tandem, They aren’t 100 percent correlated. So one market may be up and one may be down.

Diversifying across countries, industries and company sizes are all good ways to get investments that respond differently to varying market forces.

Health Expenses

Medical and long-term care expenses are the monsters lurking under the bed in old age...

Many times people don’t plan for it as much because they’re already paying it. But it’s going to cost a lot more when you’re 85 or 90.

The most basic way to guard against long-term care costs or escalating medical expenses is by purchasing insurance.

Insurance is not an investment; it’s a protection vehicle. You don’t buy insurance because you’re going to need it. You buy it just in case. You could be paying premiums and the odds of you needing it are low. Or maybe you don’t need a Cadillac plan. Just a simple plan would do to help with those costs.

Understanding how much money your portfolio will provide and the extent to which your portfolio would be able to bear additional health care costs will show you how much insurance may be needed to fill the gap.

Forced Retirement

You may have planned to work until age 70, but life may have had other plans for you. Anything from health issues to economic downturns imperil employment.

If you want to retire at 65 and have to save X amount of dollars for that, you may want to save additional money, just in case.

It’s easy to say ‘save more,’ but be sure that your plan is flexible.

If you had projected living on $5,000 per month, run the numbers at a lower level. What will happen if you can only spend $4,000 per month?

Run those other plans, the what-if scenarios,

You can read the full article and spin the Wheel of Retirement Risks here.