Most people, when they consider the risks that they face in their finances, think first of Market Risk. Risk Management, however, involves much more than the market. There are several key components to managing risk and a qualified financial planner can assist you with a full understanding of both risk analysis and risk tolerance (two different animals).
At every turn, retirees, and soon-to-be retirees face threats to their financial well-being. If those threats come to pass and take their toll, the retirement portfolio will not have decades to recover and grow anew. Mistakes made now have the potential to seriously affect retirees’ lifestyles.
Risk comes in many forms, other than the market. Take inflation, for example. What happens if inflation returns with a vengeance in double-digit doses? Many clients of retirement age recall this happening when they were much younger. Even at a normal pace, inflation can gradually eat away at your nest egg. What if interest rates do not meet your expectations? Taxes, if mis-managed, can put your plan at risk by delivering less than expected. Potential illnesses and eventually requiring long-term care are risks that must be addressed. Longevity risk puts more stress on the portfolio to perform longer than originally expected. Retirees are understandably concerned about outlasting their resources.
These are all risks that can seriously infringe upon your retirement dreams. But they can all be managed effectively when considered as part of the overall financial plan.
Stay tuned and we will examine some of these risks in detail.
**Excerpt From “Financial Stability For Life”, by Daniel E. Butler, CFP®
Any opinions are those of Butler Financial, LTD. and not necessarily those of RJFS or Raymond James. The information contained in this report does not purport to be a complete description of the securities, markets, or developments referred to in this material. There is no assurance any of the trends mentioned will continue or forecasts will occur. The information has been obtained from sources considered to be reliable, but Raymond James does not guarantee that the foregoing material is accurate or complete. Any information is not a complete summary or statement of all available data necessary for making an investment decision and does not constitute a recommendation.