5 Key Risks to Your Retirement Income

When the COVID crisis hit in 2020-2021, many of those close to or in retirement suddenly felt unsure of their ability to maintain their retirement lifestyle after their portfolios went down so dramatically.? A fair number of those recently retired ended up going back to work and some who planned to retire shortly ended up delaying their retirement date.?

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Fast forward almost 4 years and the markets have not only recovered, but are regularly setting new all-time record highs.? For those able to rationally weather the storm and stick to their investment plans, the market downturn has left no lasting effects.? It was certainly a good wakeup call though and one that some have already forgotten.?

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So now that we’re two years into a bull market, what major risks are poised to derail your current retirement plans?? This week I wanted to highlight the 5 main risks to your retirement so that you can evaluate how your portfolio will fare:

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1)?????? Longevity – With continuous advances in modern medicine, people are living longer than ever before.? Could your portfolio continue to provide income to age 90?? What about if you live to be 100?

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2)?????? Asset Allocation – Particularly important to review after a strong market year like we saw in 2024, how much of your portfolio is invested in equity holdings?? Could you survive another significant market drop if you’re actively drawing retirement income today?? Maybe it’s time to take some “profit off the table” and move some of your equity holdings to less volatile investments.???

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3)?????? Inflation – The potential for rising prices to erode the purchasing power of your investments is ever present.? Over the course of 25 years, a 2% per year inflation rate will reduce your “purchasing power” by 40%!? Make sure you’ve taken a realistic inflation estimate into account when reviewing your retirement projections.?

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4)?????? Withdrawal Rates – How much are you pulling out of your investments each year?? Is the withdrawal rate you’re currently on a sustainable one?? Some argue that you need more money in the later years of retirement for health costs while others prefer to spend it while they still can.? For most, a middle ground between the two is probably right but it’s important to decipher what withdrawal rate is right for you.?

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5)?????? Health Care Costs – Could a significant medical event severely disrupt your retirement plans?? Or could the long term care costs of one spouse leave nothing left for the survivor to live on down the road?

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Whether you’re retiring now, still 15 years away or well into your golden years, answering the above 5 questions can help identify pitfalls that you may not be prepared for.? Being pro-active in your retirement planning can help you attain the retirement lifestyle you desire.? Discuss your options with a Certified Financial Planner who can help you identify the type of retirement you want and create a plan to help you achieve it.? Like I’ve said before, a simple conversation or two now can go a long way to drastically improving your retirement situation for many years to come.??????? ??

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Darcy Feth, CFP?

Certified Financial Planner

IG Wealth Management Inc.

Insurance products provided through IG Insurance Services Inc.

Investment products are offered through IG Financial Services Inc.?