Top Concerns in Retirement

| July 08, 2019
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A prominent wealth management firm recently conducted a study of the biggest post-retirement challenges retirees face today. 

These are five of the biggest post-retirement challenges according to retirees:

Longevity

  • A 55-year old man has a 76% chance of reaching age 90, while a woman of the same age has an 82% chance.
  • You may very well spend as many years in retirement as you did during your career.

Volatility

  • Electronic trading
    • Trading is now conducted at lighting fast speeds among numerous participants around the world. 
  • 24 hr markets
    • Trading doesn't stop when the market closes and the use of social media has accelerated the speed at which decisions are made

Inflation

  • $10,000 today will only be worth $7,500 in 10 years from now with a 3% long-term average annual inflation rate.

Taxation

  • Failing to consider the impact of taxes and changing tax laws can have a material effect on your nest egg.

Leaving a Legacy

  • Federal estate tax alone can reduce the legacy you hope to leave someday by as much as 40%.

No matter how well you save during the accumulation period, it’s critical to plan how you convert these assets to income. Keep in mind that aside from Social Security and those lucky enough to retire with a pension, there may be no source of guaranteed income. 

Another study was conducted by a group representing,  The American Institute of CPAs, concluded going broke was the top concern in retirement. Overall, the study indicated that the top three sources of client’s financial and emotional stress impacting their retirement nest egg are: healthcare costs, market fluctuations and unexpected costs.

To help Americans feel more confident about their retirement readiness, members of the American Institute of CPAs’ Personal Financial Planning Executive Committee put together these 5 tips:

  1. Don’t wait, explore LTC coverage early.
  2. Don’t look at your portfolio too often.
  3. Ramp up savings by taking advantage of catch up retirement plan contributions once age 50 or older. 
  4. Have a tax-efficient drawdown strategy.
  5. Plan to pay off or pay down debt before retirement.

Having your family know what your desires are for them and their eventual legacy is invaluable to family wealth planning. Forming a team with your financial, legal and tax advisors in conjunction with family members is the key to success in estate planning.

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