Market volatility is one of the most important reasons that seniors today are aware of the benefits of paying attention to their financial strategy. As an investor, you have relatively no control over the markets. But you do have control over the planning decisions you make related to withdrawal sequences, taxes and even the way in which you claim social security benefits. Here are some tips to keep in mind when you are thinking about saving for your retirement in St. Louis.
Poor Market Conditions Can Have Impacts on Making Withdrawals
If you experience poor market conditions during your early retirement years, withdrawing money during this period limits your portfolio growth in the future. This is known as the sequence of returns risk and it can do a lot of damage for your retirement future. As an investor, you should expect that market declines will be a part of the cycle of saving ahead for retirement. Make sure you investigate all of your options before you withdraw money in the early years.
Too Many Retirees Underestimate Their Expenses
Many people don’t like making adjustments to their lifestyle when their paycheck goes away and instead is replaced by their retirement saving plans. The reality of the situation, however, is that most people do need to consider downsizing. You also need to be aware that required minimum distributions from your retirement accounts as well as social security can be taxed. For this reason, it’s important not to underestimate what you spend.
Underestimating Your Life Expectancy
There is no doubt that longevity is improving, especially as it relates to women. You need to plan for a long life expectancy as well as some of the costs you are likely to consider as you age. One of the most detrimental impacts to your retirement savings portfolio can be a long-term care event.
Without long-term care insurance, you may be required to spend down your assets in order to qualify for Medicaid, or you may deplete your assets much sooner than you expected if you were to encounter a long-term care event at age 65 as opposed to age 75.
One way to plan for your long life expectancy is to think about the time in which you will claim Social Security benefits. You need to consider factors such as your retirement date, the need for income, your health status, and your life expectancy. Many financial advisors will recommend that you wait until full retirement age to tap into your Social Security benefits.
To the Best Extent Possible, Protect Investments from Volatile Markets
You need to be conscious about developing a portfolio that is able to withstand various alterations in the market. You also need to be aware of how you handle your emotions in reaction to volatile markets. The best way to do this is to have a diversified portfolio. You cannot predict all of the various factors that will impact your investments, but it’s better to rely on longer term trends that are relatively safe.
Plan Ahead to Create Enough Income in Retirement
The biggest challenge that many retirees face is simply coming up with enough funds to support their living expenses. An ever-decreasing number of individuals have a corporate pension to count on. This used to be a critical component of many a retirement stream of income. This means now that you need to pay more careful attention to your investment portfolios, keeping in mind issues like paying for long-term care as well as how longevity will influence your future.
To learn more about planning for and thriving in retirement, contact Senior Health Solutions, LLC. We offer a broad array of key products and services for seniors in St. Louis and surrounding areas. Contact us at 636-244-4415 or contact us online to schedule an appointment.