Retirement is one of the most important and significant events in a person's life. It's the time when people transition from a working lifestyle to a more relaxed and leisurely one, but it also comes with its own set of risks. Here are five of the top risks that people face going into and during retirement, and how Oakwell Private Wealth Management can help you to mitigate them.
1. Inadequate Savings:
One of the biggest risks people face going into retirement is having inadequate savings. This lack of savings can lead to financial stress and insecurity in retirement, and it's essential to have a savings plan in place to avoid this risk. At Oakwell, we work with our clients to educate them on what adequate savings looks like to support their desired lifestyle. Once we identify all income streams either before or during retirement, our advisors are able to determine a savings rate and balance that should support their goals.
2. Longevity Risk:
Another significant risk in retirement is longevity risk, or the risk of outliving one's savings. With advances in medicine and technology, people are living longer, which means they may need to support themselves for 20 or 30 years in retirement. To mitigate this risk, it's important to have a well-designed retirement plan with adequate savings that takes into account the possibility of living a long and healthy life.
3. Investment Risk:
Investment risk is another concern in retirement, as investment portfolios can be affected by market fluctuations and economic changes. To mitigate investment risk, it's important to have a well-diversified portfolio, and to work with an Oakwell advisor who can help you navigate the ups and downs of the market.
4. Healthcare Costs:
Healthcare costs are a significant concern for retirees, as medical expenses can add up quickly and eat into savings. To mitigate this risk, it's essential to have comprehensive health insurance coverage, and to plan for potential healthcare costs in retirement. At Oakwell, we help our clients face this risk by ensuring our clients have all or a combination of adequate insurance, Long Term Care (LTC) policies, or adequate savings.
5. Sequence of Returns:
Sequence of returns is a significant concern for people going into retirement. This refers to the order in which returns on investments occur, and it can have a significant impact on retirement savings. If a retiree experiences a period of negative returns early in their retirement, it can significantly reduce the overall value of their portfolio, even if the average return is positive. This is because the retiree may need to withdraw money from their portfolio during a period of declining values, which can lead to a permanent reduction in their retirement savings. To mitigate this risk, it's important to have a well-diversified portfolio, to plan for withdrawals during different market conditions, and to work with an Oakwell advisor to develop a retirement strategy that takes into account the risk of sequence of returns.
In conclusion, retirement is a significant event in a person's life, and it's important to be aware of the risks that come with it. By working with an Oakwell wealth advisor, we will work with you do develop a well-designed retirement plan that takes steps to mitigate risk so that you can ensure that your retirement years are happy and financially secure.
Oakwell Private Wealth Management is a Registered Investment Advisor. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities product, service or investment strategy. Investments involve risk and unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial advisor, tax professional or attorney before implementing any strategy or recommendation discussed herein.