Prepare For Retirement In Minneapolis
Baby Boomers Retirement In Minneapolis
There are many risks that a Baby Boomer in Minneapolis, MN need to plan around whether they are in or near retirement. Of course, there are many more than five, but these five are the risks that are come up the most. They seem very simple, yet are often overlooked because most pre-retirees and retirees don’t have a retirement plan. If you have a retirement plan, make sure that your plan can cover these five risks. If you don’t have a written retirement plan, now is a good time to start.
Often overlooked, more so now than in the past because inflation has been modest over the last 10 years according to the Consumer Price Index. However, when we look at the price of gas to fill up our cars, it is significantly more. In 1997, gas was only $1.22, now it is at least double that. Think back to what you paid for your first home.
‘The reason inflation is so difficult to overcome today is because interest rates are much lower than what they have been in the past. It is more difficult to find a safe investment that will give a decent interest rate which is causing more baby boomers taking more risk than usual with their investments.
It has also created conservative investors to invest too conservatively if they are concerned about taking risk. Because interest rates are so low, baby boomers that aren’t seeking enough return also will cause them to lose purchasing power with their money over time.
When creating your retirement plan, make sure you have planned your income and assets to keep up with inflation.
Longevity Risk Can Affect Your Retirement In Minneapolis
How long you need your money to last is the big question. You would know the answer if you knew when you are going to pass away. The average life expectancy for someone who is 65 or older is 82 for men and 84 for women per the Social Security Administration Office. That means you need to have your money last a lot longer than your parents or grandparents. You could be spending more time in retirement than you were working. When you create your income plan for retirement, make sure you adjust it to last longer than you expect. One of the greatest fears in life is running out of money. Don’t let that happen to you because you lived too long.
Retirement In Minneapolis Long-Term Care
The one thing that we all hope will never happen to us. However, it is naïve to think it isn’t going to happen to you. On average, almost 70% of Americans that have made it to retirement age will use some form of long-term care per the National Association of Insurance Commissioners. Per NAIC, the average cost of a nursing home is $78,000 per year in 2010, with the costs only rising. If you go in to a long-term care facility, you need to have a plan, not only for yourself, but also for your loved ones. If you plan on leaving assets to your spouse to live off of when you are no longer here, or want to leave a legacy behind, you want to make sure you have a plan to your long-term care. Whether you can self-insure, need LTC insurance, or use a hybrid Life/LTC combo plan, you need to have a plan in place.
Early Loss Of Spouse
We all hope that we will die with our spouses on the same day. As it is wishful thinking, realistically we know that isn’t likely. Do you know what your income will look like if one spouse passes? The outcome could be different depending on who passes first. Especially if one spouse has a pension and elected to take a single life income, that could create income issues if there are not enough assets for the remaining spouse. When it comes to Social Security, you will lose a Social Security check as a married couple, but at least you will keep the larger of the two. Planning for the “what-if” and know what the income will look like when one spouse passes away is crucial so that you know how to have a prepared retirement plan in case that does happen.
Market corrections can affect your retirement in Minneapolis. We all knew it was going to be in this list for baby boomers in or near retirement. With the markets at all-time highs, it is worth giving you a friendly reminder to check how much risk you have in your portfolio for retirement. When the market is doing so well it is hard to remember the 2001 and 2008 market corrections where we saw over 50% losses from peak to trough. Ask yourself, can you afford to lost 50% of your portfolio. If not, how much can you afford to lose? The best way to understand how much you can lose and maintain your lifestyle is to put your own income plan together. By understanding how much income you need to maintain your lifestyle, it will help you understand how much risk you can take and will let you know how much you can still lose to maintain your lifestyle in retirement.
These 5 risks are the most common that come up time and time again in a retirement plan. Keep in mind there are more risks than the five mentioned, and there are risks within the risks. The point is to take these five risks mentioned and to have a plan for each of them. It will ask the questions in your own retirement plan or ask the right questions to make sure you are putting a solid retirement plan together. Preparing for inflation, longevity, long-term care, early loss of spouse, and market corrections will help make sure you have a successful retirement. If you need help putting a plan together, make sure to reach out to a retirement planner who has a fiduciary responsibility.
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