A woman in a pool rests in between swimming laps.

Retirement

5 risks you face in retirement

Before you dive into retirement, consider what risks you might face and how you can prepare.

4 minute read

•

June 03, 2021

Retirement

Planning for retirement

Market volatility

Cost of health care in retirement

Article

Taxes

Page

Before you dive into retirement, consider what risks you might face and how you can prepare.

After decades of carefully balancing your family, job, and sanity, retirement should come as a relaxing and well-deserved reward from a lifetime of hard work doing all the fun things you pictured.

Here’s how a Vanguard personal advisor can help you plan for 5 common risk factors you might run into in retirement.

Market risk

What it is—Unexpected changes in investment returns, inflation, or other market variables.

How to prepare for it—Make sure your asset allocation is right for your goals. Money meant for spending in retirement may have a different allocation than money earmarked as an inheritance for your loved ones. And don’t be too quick to try to minimize market risk—with some goals it could make sense to be more aggressive!

How an advisor can help—They’ll customize a financial plan for your specific needs and goals. And they’ll run your portfolio through 10,000 hypothetical market scenarios to make sure it’s prepared for all kinds of future market conditions.

Longevity & mortality risk

What it is—Outliving your assets or having a shortened life span.

How to prepare for it—Consider an annuity, which can address both risks by giving you an income stream for life, and guaranteeing a minimum payout via a rider. You can also consider life insurance if you’re concerned about support for your family.

How an advisor can help—Your advisor can recommend a drawdown strategy for your retirement savings that’s likely to meet your spending needs. They can also offer guidance on whether it makes sense to annuitize some of your assets.

Health risk

What it is—Not being able to pay your health care costs.

How to prepare for it—Get a personalized estimate of your expected costs and choose the right health insurance for your needs.

How an advisor can help—Your advisor can provide a custom estimate of your health expenses (including long-term care) and help you choose the Medicare plan that’s best for you.

Event risk

What it is—An unforeseen event that has a large financial impact.

How to prepare for it—Build flexibility into your spending plan and consider additional insurance to help absorb certain types of shocks.

How an advisor can help—An advisor can apply a dynamic spending approach to your plan to give you a balance of flexibility and predictability.

Tax and policy risk

What it is—Changes in rules governing health coverage, retirement savings or benefits, or estate planning.

How to prepare for it—Make sure your portfolio contains a variety of asset classes and account types, which can give you more flexibility if policies change.

How an advisor can help—Your advisor can provide guidance on how tax or policy changes might affect you and suggest potential actions.

You’ve got this

Want to make sure your retirement plan is ready for anything? Financial advice can help you set things in motion.

Let's talk