Retirement plannning doesn’t seem as easy as it used to be. During the 1990s, everyone assumed that markets only went up and double-digit returns were accepted by many as normal.
Now, reality has set in. With lower returns and a poor(er) economy, many facing retirement are now worried. They’re worried about running out of money in retirement. It’s called longevity risk.
But, there are other risks also affecting seniors and those planning retirement many don’t even suspect – these are risks no one is talking about.
When I was a kid, everyone wanted to live a LONG life; today, many are afraid of living too long! This phenomenon may be occurring because (1) many in my parent’s generation had defined benefit pensions – an income they couldn’t outlive, something most of us don’t have these days – and (2) we’re living longer – the definition of ‘old’ is different today.
When you couple this new ‘longevity risk’ with the fact we’ve cured many of the diseases that, back in the old days, used to kill us, many of us are now living long enough that not only has health care become a real issue, so has personal care!
Sure, it’s old news: People are worried about running out of their money. But wait, as they say on those tv commercials, there’s more:
Have you ever noticed that whenever there’s a problem facing the marketplace, financial product providers magically appear, anxious to create solutions they can package and market to the public. Often, however, the public has to be careful, because sometimes the packaging and presentation, which may meet all required disclosure rules, often makes NO attempt to educate the buyer on the hidden external issues that can heavily impact their decision-making.
Here’s a simple example: While the product distributors often use “average annual return” in their demonstrations and illustrations to sell their solutions, many, if not most, individual investors fail to recognize that returns never seem to come in ‘on average’. Not only are they different every year, they compound, as well. Not only do gains compound, so do the losses; and, that’s important, especially for seniors who are living off their life savings. But, while the “average annual return” calculation can mask some problems, there’s yet another one.
It’s a hidden risk that comes into play for those taking income withdrawals from their retirement savings, as gains and losses are being compounded – a hidden risk that few investors know about – simply because they are the risks no one ever talks about.
This hidden risk primarily impacts those who are close-to and planning their retirement. If you fit that description, and are depending on your investment portfolio to provide a significant portion of your retirement income, I think you’ll find what you learn in our report, The Hidden Risk No One Talks About, to be very enlightening.
Enjoy!
Jim
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Jim Lorenzen is a CERTIFIED FINANCIAL PLANNER® professional and An Accredited Investment Fiduciary® in his 21st year of private practice as Founding Principal of The Independent Financial Group, a fee-only registered investment advisor with clients located in New York, Florida, and California. He is also licensed for insurance as an independent agent under California license 0C00742. IFG helps specializes in crafting wealth design strategies around life goals by using a proven planning process coupled with a cost-conscious objective and non-conflicted risk management philosophy.
The Independent Financial Group does not provide legal or tax advice and nothing contained herein should be construed as securities or investment advice, nor an opinion regarding the appropriateness of any investment to the individual reader. The general information provided should not be acted upon without obtaining specific legal, tax, and investment advice from an appropriate licensed professional.
