Risks Faced in Retirement #7: Frailty

As financial advisors, we help clients with their investments. But there’s more.  In my opinion, a good financial advisor looks at the risks his or her clients will face during retirement and then builds a plan to address those risks. So we at Money Matters make it our job to understand the financial risks faced by retirees.

One of those risks is frailty, the result of deteriorating mental or physical health. In this situation,

Risks Faced in Retirement #6: Elder Financial Abuse

It’s an unfortunate fact: People age 70 and older are prime targets for financial abuse and fraud. Victims come from every ethnic and socioeconomic group, but the ones most likely to fall prey to financial abuse are women, 70 to 89 years old. Many are never the same emotionally after being taken advantage of by someone they trust. And disturbingly, 55 percent of the perpetrators are family members, friends, neighbors, and caregivers. Sixty percent of family perpetrators are adult children.

Risks Faced in Retirement: #5 – Long-term Care Risk

According to the Social Security Administration, 70 percent of Americans over the age of 65 will have a long-term care expense during their lifetime. Seventy percent. That is a very high probability that at some point you will need assistance with basic activities, such as dressing yourself, taking a shower, or even eating. To get help, you may need to move to an assisted living facility, a nursing home, or go to adult daycare.

Risks Faced in Retirement: #4 – Health Expense Risk

I think most retirees are concerned about healthcare costs, and that a major health issue could be financially devastating. It’s a real issue, and one that is more dangerous than most truly understand. According to a study by Fidelity, the average couple believes they’ll need $50,000 to cover their medical expenses in retirement (from age 65 on). Unfortunately, another study by the Employee Benefit Research Institute found that actual costs ranged from $150,000 to $360,000 depending on coverage,

Risks Faced in Retirement:#3 – Excess Withdrawal

In my view, once you retire, you have to switch from offense to defense in terms of investing. After spending decades working and building your retirement, you often have to live on those investments. In that case, you should be on the lookout for any dangers that could damage your investments’ ability to support your lifestyle, like “Excess Withdrawal Risk.”

This risk is exactly what it sounds like: the risk of taking more from your investments than is sustainable long-term.

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