Risks Faced in Retirement #13: Employer Insolvency Risk

I once spoke with a pilot who had worked for Delta Airlines. He’d felt good about his retirement for most of his working life: after all, he was expecting to receive about $120,000 a year from his pension. Then Delta went bankrupt. He did eventually end up with a pension, but it ultimately paid around $36,000. That may seem like a good pension, but not to someone who built his retirement plan based on $120,000 a year.

Risks Faced in Retirement #12: Loss of a Spouse

Losing a spouse is a traumatic, emotional experience, but sadly, it’s one that married couples need to plan for. And unfortunately, there are financial implications in addition to the emotional impact—and according to a survey by the Society of Actuaries, most people do not comprehend the financial magnitude of such a loss.

A spouse’s death always means a reduction in Social Security benefits, as only the larger of the two benefits will be paid out to the surviving spouse.

Risks Faced in Retirement #11: Forced Retirement

You’ve probably decided when you’d like to retire. Maybe you plan to work until you’re 65 so you can build up your retirement nest egg. But what would happen if your job was outsourced, or your employer closed down your branch, or your company “needed to cut costs,” and you were out of a job when you were just 61? Could you find a level of employment comparable to your old job? If you could,

Risks Faced in Retirement #10: Liquidity Risk

I recently read a definition of liquidity risk that called it “the inability to have assets available to financially support unanticipated cash flow needs.” You could translate that as: “Stuff happens and you need to have enough cash to cover that stuff when it happens.” The “stuff” is an unusual, nonrecurring expense like a big car repair or dentist bill.

Liquidity risk can be especially dangerous if you are retired and living on your investments.

Risks Faced in Retirement #9: Interest Rate Risk

Whether they’re going up or down, interest rates can have a big effect on your investments, and therefore have the potential to pose a risk (or a benefit) to your financial wellbeing.

When interest rates go up (as they’ve been doing), bond investments tend to go down, which could decrease the value of any older bonds you possess. For example,

if you have a bond that pays 3 percent and rates rise to 5 percent on the open market,

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