With the average American projected to live an additional two or more years this results in huge impacts on the pension finances and creates additional risks for every individual planning for retirement. The referenced article in Pensions and Investments describes the impact on organizations that currently have defined benefit plans (pensions) but does not address the impact on individuals.
Anyone planning for retirement is concerned about out-living his or her money. Not only do you require adequate savings to maintain a preferred retirement lifestyle but you also need to be concerned about the risks of a longer life. The longer life requires either additional savings or exposing your investments to riskier choices, which may work against you. Higher risk is a ‘double edged sword’ – it results in either significantly higher or lower returns!
The result of a longer life span also exposes your savings to additional inflation risks. With a lower risk portfolio of income oriented choices (avoiding the market risk of stocks) you are exposed to lower buying power as inflation shrinks the value of a dollar.
There are creative strategies newly announced in the financial industry that address both the higher risks of the stock market and inflation. This allows you the ability to experience the upside of market risk with NO down side exposure – plus protects the buying power of your savings from inflation. To learn more about these concepts please contact us for more information.