Post-retirement period is the golden period of life which is supposed to be peaceful and comfortable. You spend your entire youth in earning money and saving it to be utilised in making your post-retirement period in comfort. But imagine that money not being sufficient to face any unforeseen event. There are many such events that you might not expect like death of your partner, critical illness, stock market fluctuation, unplanned longevity, bankrupt pension plan, etc. This is why you must choose a retirement plan that will back you against all such unexpected events and keep you financially strong.
To choose a retirement plan that accumulates good corpus to support you in all conditions you must first access the risks that you may face in near future. These risks can result in reducing your post-retirement corpus or can even fail all your post-retirement plans. This will help you in aiming for the right amount and choosing the suitable investment vehicle.
Almost every individual plans a post-retirement life with all the to-do wish-list and a comfortable life. From the time of when to retire to where to stay after retirement and jobs or business to do after retirement, a person plans many things. And for this most of the people invest in retirement plan to create a sufficient corpus to support these plans financially. Many people also take help of professional advisors in planning the same. While doing these one needs to factor in the risks to avoid unwanted shocks. These risks can be same as your pre-retirement time as well, along with some added ones. But because of the void of monthly income, you need to account these carefully and aim for a suitable corpus to be built.
Here are some of the most common post-retirement risks that you must factor in while planning for post-retirement corpus.
- Health care and housing risks – Healthcare and medical facilities are so costly that can make even an earning person a run for money. So, when you are planning for a retirement plan consider the unexpected health care bills and cost of housing along with the inflated rates.
- Personal and family risks – Personal risks or risks related to the family are the ones that are caused due to the turbulence in your personal life. These include death of your spouse, as it can not just create void in your life of a partner but also make you financially week due to reduced pension. It also includes risk of change in marital status as if you get divorced. Other risk is related too your longevity, as the corpus should be sufficient if you live longer than you expected.
- Financial risks – Post-retirement financial risks mainly include inflation as the cost of living increases with years passing by. Other factor is interest rates as your retirement plan’s growth depends on the way interest rates move. Banks and financial institutes pay out less amount as returns on investments when the interest rate is low. Stock market performance is also a risk in case you to have invest in market-volatile investment vehicle.