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What Risks Would I Potentially Have Moving Into Retirement

Retirement marks a significant transition from the accumulation phase to the distribution phase of financial planning. At West Advisory Group, we often get asked about the risks associated with this crucial life stage. In our latest video, “What Risks Would I Potentially Have Moving Into Retirement,” we delve into the key risks you should be aware of as you approach and enter retirement. Here’s a detailed overview of the main points discussed in the video.

Longevity Risk: Planning for a Longer Life

One of the primary concerns in retirement planning is longevity risk. With people living longer than ever, it’s not uncommon to know someone who has reached 100 years old. If you retire at 60 or 62, you might need to plan for 30 to 40 years of retirement. Ensuring that you have sufficient savings to cover this extended period is crucial.

Health Risks: Preparing for Medical Expenses

Healthcare costs are a significant concern during retirement. Even with insurance and Medicare, unexpected medical expenses can arise. Studies indicate that retirees may spend over $150,000 on medical expenses from age 65 onwards. It’s essential to prepare for these costs to avoid financial strain.

Inflation: Protecting Your Buying Power

Inflation gradually erodes your buying power over time. While it may not be noticeable from month to month, its impact becomes significant over several years. Ensuring your retirement strategy accounts for inflation is vital to maintaining your standard of living.

Tax Considerations: Managing Your Tax Burden

Taxes are an inevitable part of life, including retirement. The nature of your income—whether taxable or tax-free—can significantly impact your financial situation. Future tax rates are uncertain, making it essential to stay informed and plan accordingly.

Market Volatility: Mitigating Investment Risks

Market volatility affects the distribution phase differently than the accumulation phase. While volatility can benefit long-term accumulation, it poses a risk during distribution. Developing a disciplined investment strategy that minimizes the impact of market fluctuations is crucial to preserving your retirement savings.

Sequence of Returns: Ensuring Consistent Performance

The sequence of returns risk is closely related to market volatility. The order in which you experience investment returns can significantly impact your retirement savings, especially when taking regular distributions. Consistent and efficient investment performance is essential to avoid depleting your funds prematurely.

Comprehensive Retirement Planning

Addressing these risks requires a comprehensive approach to retirement planning. At West Advisory Group, we incorporate these considerations into our PEAK Formula, ensuring that all aspects of your financial life are covered. By proactively managing these risks, we help you achieve a secure and fulfilling retirement.

At West Advisory Group, we’ve seen it all when it comes to retirement planning.

We understand that while we can’t control everything, we’ve mastered the aspects we can through our signature process, PEAK FORMula.

This comprehensive process is designed to handle the ebbs and flows of retirement life, ensuring you are prepared for the various risks and challenges you may face.

Our team of experts is perfectly suited to help those who are five years or less away from retirement transition smoothly from the accumulation phase of their working life to the distribution phase of retirement.

With our guidance, you can confidently navigate this important life stage and enjoy a secure and fulfilling retirement. Reach out to us today to see how our PEAK FORMula can work for you.