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Risks to Retirement

Everyone’s path to retirement and through it is different. Understanding that path, both for the individual prospect you’re working with and more generally, can provide important perspective during the sales process. I came across the list below from a study conducted by Metlife Mature Market Institute, and found it to be a helpful single source of all the pitfalls and obstacles that can threaten a secure retirement. But it also serves as a reminder that anxiety, concerns and fears on the part of our prospects are real. Some of these risks may have been mitigated with good planning, but others remain.

It’s worth a review.

Fifteen Retirement Risks*

Longevity: Outliving Retirement Resources

• I might deplete all of my savings

• I might not be able to maintain a reasonable standard of living for the rest of my life

• I might not be able to leave money to my children/beneficiaries or their heirs

Inflation

• I might not be able to keep the value of my savings and investments up with inflation

Interest Rates

• My income in retirement may vary based on changes in interest rates

Stock Market

• My assets may be eroded due to stock market declines or fluctuations, including stocks in a current or former employer

Business Continuity

• My pension or an annuity I purchased might be reduced due to insolvency of my former employer or an insurance company from which I bought an annuity

Employment

• I might not be able to work as long as I planned

• I might not be able to secure part-time work in retirement to supplement my income

Public Policy

• My financial resources in retirement will be reduced due to changes in government programs such as Social Security or Medicare

• My financial resources in retirement will be reduced due to increases in taxes

Unexpected Health Care Needs and Costs

• I might not have enough money to pay for a long stay in a nursing home

• I might not have enough money to pay for adequate health care

Lack of Available Facilities or Caregivers

• I may not have access or be able to afford quality facilities or caregivers when I need long-term care services

• I might not be able to rely on children or other family members to provide assistance

Loss of Ability to Live Independently

• I might not be able to live independently any longer

Change in Housing Needs

• I might not be able to afford to stay in my current home for the rest of my life

Death of a Spouse

• My spouse/partner may not be able to maintain the same standard of living after my death, if I should die first

Other Change in Marital Status

• I might have retirement savings depleted due to divorce or unwanted action by my spouse

Unforeseen Needs of Family Members

• My retirement resources might be depleted due to providing urgently needed help to other family members

Bad Advice, Fraud, or Theft

• My retirement resources might be depleted due to bad advice

• My retirement resources might be depleted due to fraud or theft

*Source: Society of Actuaries

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