Retirement Risks … and Mitigation Strategies

Aug 25, 2022 • Written by Paul Staib | Certified Financial Planner (CFP®), MBA, RICP®

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Retirement planning risks and mitigation strategies

A critical component in the development and implementation of a comprehensive retirement plan includes the assessment and mitigation of risks. The table below details several of the more common and impactful factors that may potentially put your retirement at risk. While these factors are not the only things which could impact your retirement, they are good areas on which to focus. Recognizing and planning for these risks can greatly improve the odds of a successful retirement.

Risk Factors

RISK FACTORDESCRIPTIONMITIGATION STRATEGIES
Longevity RiskThe risk of living longer than estimated
and running out of retirement savings.
The earlier you retire, the potential
greater risk exposure
* Estimate Your Life Expectancy
* Delay Retirement
* Defer Social Security
* Pension Optimization
* Systematic Withdrawal Strategy
* Asset Allocation
* Purchase Annuity(s)
* Utilizing Home Equity
Inflation RiskThe risk of underestimating the effects of
inflation on expenses through the
retirement period is one of the
biggest challenges of retirement planning
* Asset Allocation
* Systematic Withdrawal Strategy
* Defer Social Security
* Purchase Annuity(s)
Market Volatility RiskSequence of Returns risk: the risks
associated with investing and
withdrawing money at a point in time
when the balance is down due to market
performance
* Systematic Withdrawal Strategy
* Asset Allocation
Health Care RiskThe risk of underestimating the effects of
aging and not adequately planning for
health care related expenses, including
long-term care
* Health Savings Accounts (HSA)
* Long-Term Care Insurance
* Asset Allocation
Public Policy RiskThe risk of unanticipated change in
government policy with regards to tax law
and government programs such as Social
Security and/or Medicare can have a
negative impact on retirement security
* Increased Personal Savings
* Health Savings Accounts (HSA)
* Ongoing / Periodic Planning

Risk Mitigation Strategy

The table below illustrates the same information, but is organized around the specific strategies and which retirement risk factor(s) they help address.

MITIGATION STRATEGYLongevity
Risk
Inflation
Risk
Market
Volatility
Risk
Health
Care
Risk
Delay RetirementXXXX
Defer Social SecurityXX
Annuity(s)XX
Asset AllocationXXXX
Systematic Withdrawal StrategyXXXX
Health Saving Account(s) (HSA)XXX

Paul Staib | Certified Financial Planner (CFP®), MBA, RICP®

Paul Staib, Certified Financial Planner (CFP®), RICP®, is an independent Fee-Only financial planner. Staib Financial Planning, LLC provides comprehensive financial planning, retirement planning, and investment management services to help clients in all financial situations achieve their personal financial goals. Staib Financial Planning, LLC serves clients as a fiduciary and never earns a commission of any kind. Our offices are located in the south Denver metro area, enabling us to conveniently serve clients in Highlands Ranch, Littleton, Lone Tree, Aurora, Parker, Denver Tech Center, Centennial, Castle Pines and surrounding communities. We also offer our services virtually.

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