What are the biggest financial risks in retirement?

For many, retirement is an exciting new chapter where you have more free time and can embrace new hobbies or passions. It is called the “golden years” because you’ve worked, saved, and planned for decades to reach retirement. Yet, even with a solid plan, retirement can still come with financial risks. Learn more about these potential pitfalls in retirement and how to avoid them.

1. Running out of money

Surprise expenses can quickly derail your retirement savings, and so can market swings and inflation. As you prepare your finances, focus on creating a detailed plan tailored to the known elements, with some cushion for the unexpected. Plan to adjust and recalibrate your spending. The biggest factor is understanding your cash flow and anticipating your needs.

2. Healthcare costs

Talk to your financial team about how to save for your healthcare costs as you age, along with different Medicare plans you may qualify for. Be sure to share your family medical history with your team so they can help you plan for any long-term medical expenses that might arise such as assisted nursing care, which isn’t covered by Medicare.

3. Negative market returns (sequence of returns)

For some, the markets can fluctuate right at retirement, creating negative impacts on your portfolio returns. Your financial planner can help you understand when different cycles of the economic market are at their best for you to pull funds out of investments. Focus on maximizing savings and strategically leveraging market opportunities as they appear.

Avoid these derailments

While we can’t plan for everything in life, we can plan for retirement. The earlier you start, the better chance you have at wealth accumulation. Your greatest retirement assets are your strategy and the confidence to navigate the twists and turns of your financial needs over time.

Interested in learning more about Private Wealth Management? With UMB, you have a guiding partner from financial advising and investment portfolio management, to wealth-building strategies and retirement and legacy preservation plans.