Most of us look forward to retirement, imagining that we’ll get to relax and enjoy activities we haven’t had time for such as traveling, reading, and exercising. However, as pre-retirees transition into full retirement, many don’t realize they are crossing the threshold into an entirely new way of living, one in which they’re increasingly vulnerable to risks that are unique to retirees. After spending decades working toward a goal, too many retirement plans are set back by these 7 Easy-to-Avoid Risks.
Risk 1: Longer Lifespans
In the year 2000, 50,000 people lived to be age 100 or older. By 2050, that number is expected to reach 1 million.1 With life expectancy rates higher than ever, it means that most people will need to plan for a longer retirement than they might expect. According to the Centers for Disease Control, for a couple in their mid-60s today, there is a 50% chance that at least one of them will live into their 90s. What this means is, to be safe, retirees today must plan and strategize for up to 30 years of retirement income.
Risk 2: Spending Principal
Spending principal in retirement has never been a smart strategy, but with the average life expectancy rising, it’s more of a slippery slope than ever before. To understand the potential dangers of spending principal, let’s consider a 30-year retirement like a 30-year mortgage, only in reverse.