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The Top 3 Risks in Retirement

When you get right down to it, the one goal of financial planning is simply this: to make sure you have enough money to last you through your lifetime.  Sure, some will tell you that another goal is to make you richer than anyone else, but that’s not planning. That’s rolling the dice, it’s speculation, it’s gambling – but it’s not planning.

So with that in mind, there are three main risks that a financial planner should help you deal with: living too long, dying too soon, and getting sick along the way.  Any of those things could happen to you, and since you have little or no control over whether it does or not, we need to look at the risk management side.

Risk #1: Dying Too Soon

If you’ve got a family, people who depend on you, then hopefully you’ve taken care of the risk of dying too soon.  A life insurance policy transfers that risk to the insurance company, so they’re on the hook to provide your beneficiaries with the funds they need in the event that you die sooner than you expected.  That’s fairly simple.

Risk #2: Living Too Long

But there’s the opposite risk to consider too: what if you live too LONG?  That seems strange, but it does happen.  You saved and planned your retirement budget assuming you’d only live to around, say, age 73, or even 83 but then you wind up defying the odds and you’re still alive and kicking at age 93.  Yeah, it happens.  Your nest egg has a finite amount of funds in it, and here you are still drawing from it long after you thought you would.

One way to deal with this risk is through guaranteed income.  Social Security is one source, and pensions could be another, but if those aren’t enough to meet your goals, it may be worth looking into pensionizing, or annuitizing, some of your portfolio.  Keep in mind, this won’t give you some huge rate of return, but you’re not buying it for rate of return – you’re doing it for the income guarantees.  The key is to work with your advisor to figure out which product fits with your goals and risk tolerance.

Risk #3: Getting Sick along the Way

The third scenario is getting sick and needing long-term care.  This happens to more people than you think, and it often catches them by surprise.  But for whatever reason, this is one risk that a lot of people don’t do anything about.  I guess they just figure they’ll take their chances and deal with it if and when it happens.

Not a good idea.  But – if that’s you, you should know that there’s a way to buy long-term care insurance that allows you to maintain ownership of the premiums you pay, just in case you wind up never needing any care.  It’s called a linked benefit policy, and you can find out more information on that at the link here on this video.

Just know that for each of these risks I mentioned, you have options to potentially mitigate them.  We’re really passionate about providing people with the advice and the tools they need to plan for these scenarios, with the ultimate goal of taking the worry out of it all.  If you’re not sure that you’re prepared for each of those scenarios, just give us a call – we would love to help you out.


Important Information:

The information provided should not be considered specific tax, legal, or investment advice and is not specific to any individual’s personal circumstances. To the extent that this material concerns tax matters, it is not intended or written to be used, and cannot be used, by a taxpayer for the purpose of avoiding penalties that may be imposed by law. Each taxpayer should seek independent advice from a tax professional based on his or her individual circumstances. This material was gathered from sources believed to be reliable, however, its accuracy cannot be guaranteed.

Insurance product guarantees are subject to the claims-paying ability of the issuing insurance company and are subject to their terms and conditions. Insurance products offered through Lucia Securities, LLC (CA Insurance Lic. #0H40817). Lucia Securities is licensed to offer such insurance products as life, disability, long-term care, and annuities. Lucia Securities is also a registered broker/dealer, member FINRA/SIPC, and the dba for Lucia Insurance Services. Lucia Capital Group is a registered investment advisor and the holding company for Lucia Securities.

The information provided is based on current laws, which are subject to change at any time. Lucia Capital Group is not affiliated with or endorsed by the Social Security Administration or any government agency.
Social Security rules can be complex. For more information about Social Security benefits, visit the SSA website at, or call (800) 772-1213 to speak with an SSA representative.

Annuities are long-term investment products designed for retirement purposes. Guarantees are based on the claims-paying ability of the issuer subject to their terms and conditions. Early withdrawals may be subject to surrender penalties and, if taken prior to age 59½, may be subject to an additional 10% federal tax. Annuities are not FDIC insured. Certain terms and conditions apply, so please read insurance company materials carefully.

Long Term Care coverage policies and provisions may not be available in all states. Approval may be subject to the terms and conditions of the insurance company. Insurance product guarantees are subject to the claims-paying ability of the issuing insurance company and are subject to their terms and conditions.

Rick Plum is a registered representative of, and offer securities through, Lucia Securities, LLC, a registered broker/dealer, member FINRA/SIPC. Advisory services offered through Lucia Capital Group, a registered investment advisor, and an affiliate of Lucia Securities, LLC. Registration with the SEC does not imply a certain level of skill or training.

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