Since the 1980s, retirement savings have experienced radical shifts. With the decline of defined benefit pension plans and increase of 401(k) plans, many have struggled to save enough for retirement. Furthermore, family structure, longevity and cost of living changes have further complicated these efforts. Luckily, retirees can make educated choices regarding how they want their funds used during retirement while understanding all available financial instruments that could make their dollars stretch further than before.
Life expectancies continue to outstrip savings and there are seven main risks that threaten a retiree’s finances: living too long, inflation, low interest rates, healthcare costs rising taxes and market volatility. With proper planning these risks can be overcome using various strategies such as saving early (even $25 a month in your 20s will help!), investing in diversified assets including stocks and bonds while using guaranteed lifetime income solutions like annuities as well as planning for unexpected expenses or emergencies.
Accessing affordable health insurance and Medicare are key components of retirement planning, yet these benefits don’t always cover all medical costs. Medicare premiums have also steadily increased. To ensure an adequate retirement fund, many retirees must supplement these benefits with private health plans, supplemental Medicare insurance policies or short-term care plans.
Additionally, retirees need to factor in housing expenses and home maintenance costs when planning their finances for retirement. Americans spend almost half their lives living in their home, so it’s crucial they consider what living accommodations will best meet their needs as well as any costs involved with maintaining it over time; costs may fluctuate based on factors like inflation or local real estate prices.
One important component of retirement planning is creating a legacy, including leaving money and assets behind for loved ones and important charities that matter to you. Unfortunately, leaving behind a gift often goes unplanned in one’s estate plan and could deplete an individual’s remaining assets more quickly.
Finally, retirees should carefully consider their social and emotional needs as they age, including being able to maintain a healthy lifestyle, feel accomplished through meaningful activities and connect with others through meaningful interactions. It’s also wise to plan for possible relocation due to weather or other circumstances – an emergency savings fund may come in handy here, along with having a will in place with instructions about how they’d like their assets distributed as they age – plus financial counseling education may provide much-needed help with these concerns.