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Stewart Financial Services
- Protecting Your Financial Health
Retirement...Do You Know the Risks
As you move into this stage of your life, you will also face a new set of risks:
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Contact Stewart Financial Services for more information about Retirement Solutions opportunities to meet your current and future needs and lifestyle in retirement.
Longevity
The longer you live, the greater your chance of outliving your money during Retirement. Today, there is a one in three chance that a 65 year-old male will survive until he’s 85; for women, the odds are about one in two. For many, Retirement Income will need to last a minimum of 20 years.
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Inflation
Even at the currently low level of about 2%, inflation can have a severe effect on your income over time. Many people will face a Retirement of at least 20 years, so it is important to keep your savings growing to help protect your purchasing power.
Inflation constantly erodes the buying power of savings:
Maintaining a standard of living in the latter stages of Retirement may be difficult if your client is not generating income that is outpacing inflation. This illustration shows the effects of inflation over time.
Market Risk and Market Cycle (Market Volatility)A significant market downturn near, or during the early years of Retirement can significantly reduce your retirement portfolio and the income it produces.
The sequence of Investment returns early in Retirement can have a major impact on how long the money will last. This table shows how short-term volatility in the early years can have a long-term effect on your Retirement Savings.
Both portfolios experienced the same 7.26% annual return over 30 years, but the money lasted longer for the portfolio with good returns at the beginning. |
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Retirement Risk ZoneThe Retirement Risk Zone is the five to 10 years just before and after retirement. It is the critical time when short-term losses can have negative long-term effects because there’s no time for their investments to recover. |
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