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Navigating the Top Five Retirement Risks

Longer lives and better health translate into longer retirements and new concepts of what retirement should be. Many of today’s retirees view retirement as a time to shift gears but not necessarily to slow down.

They keep their skills sharp in new job roles or by starting businesses. They continue learning new skills by going back to school as both teachers and students. Some choose to serve on boards of directors or to pursue creative and artistic passions.

However you define retirement for yourself, the bottom line is that you want to have enough money to live your life without constantly worrying that you’ll run out. It certainly pays to be prepared and to stay on plan.

What to Look For

A successful retirement plan begins, of course, with making smart savings and investment decisions long before you contemplate retiring. But of equal or even greater importance is how you manage your money after you’ve left your primary career and begin to turn to your investments to provide the income that supports your lifestyle.

To boost the chances that your savings will let you live comfortably in retirement, there are five primary areas of risk that you need to address: 

1. Timing and Withdrawals: The amount you withdraw from your retirement portfolio and when you do so are two of the main determinants of how long the portfolio will last. For example, taking large withdrawals during bear markets such as those in 1973 – 1974, 2000 – 2002 or 2007 – 2009 makes it hard for a portfolio to recover and grow.

To the degree possible, you want to minimize drawing on your capital in a weak market since you’ll have less capital for the rebound. Your annual withdrawal rate should be smaller than your average annual return less inflation. Of course, to be conservative, you could bring it down even further, and your assets may continue to grow positively even though you’re making withdrawals.

2. Market Volatility: Related to the first risk, you need to position your portfolio to withstand inevitable swings in the market, and the way to do this is through diversification and asset allocation — holding a combination of stocks, bonds, cash and alternative investments that matches your risk profile. Returns on these investments should be non-correlated, so that when one area is down, another area is up. In retirement, you need diversification to perform a balancing act of having enough growth-oriented investments toward helping achieve acceptable long-term returns and bonds and other fixed income securities to provide steady income. Annuities could also make sense to provide at least a portion of your retirement income.

3. Longevity: The good news is that you have a good chance of living to a ripe old age, but the risk here is essentially that you could outlive your assets. A woman born after 1973 has over a 20% chance of living to age 100[1].That means that if you retire at 65, you may need to plan for 35 years or more in retirement.

4. Taxes and Inflation: Don’t underestimate the ability of inflation to destroy spending power. Over the past 25 years, during which inflation has been fairly tame, the Consumer Price Index (CPI) — the cost of a basket of goods and services determined by the Bureau of Labor Statistics — has more than doubled. If inflation accelerates to 6%, prices would double in about 12 years.

5. Health Care Costs: The CPI is often not the most accurate measure of your personal inflation rate, since you may spend disproportionately on health care as you age. These costs have traditionally run at double or triple the overall rate of inflation and are not under control. In addition, consider long-term care insurance as a way to help pay for  potential chronic care costs as you get older.

Writing the Next Chapter

Thanks to a combination of advances in medical technology and better lifestyle choices, Americans are living longer and more active lives. Nonagenarians (people between the ages of 90–100) are becoming commonplace. Enjoy your retirement years — however you decide to spend them. Spending some time with your financial advisor today can help you enjoy true financial security tomorrow.


CRN-1604622-092716   Exp  09/19 

[1] Department for Work and Pensions, 2011

This award was issued on 8/1/22 by Five Star Professional (FSP) for the time period 10/11/2021 through 04/22/2022. Fee paid for use of marketing materials. Self-completed questionnaire was used for rating. This rating is not related to the quality of the investment advice and based solely on the disclosed criteria. 1519 Charlotte-area wealth managers were considered for the award; 101 (7% of candidates) were named 2022 Five Star Wealth Managers. The following prior year statistics use this format: YEAR: # Considered, # Winners, % of candidates, Issued Date, Research Period. 2021: 1514, 106, 7%, 8/1/21, 10/5/20 - 4/30/21; 2020: 1488, 103, 7%, 8/1/20, 10/28/19 - 5/8/20; 2019: 1346, 129, 10%, 8/1/19, 10/22/18 - 5/24/19; 2018: 1342, 104, 8%, 8/1/18, 11/22/17 - 5/25/18; 2017: 949, 132, 14%, 8/1/17, 11/23/16 - 6/7/17; 2016: 873, 227, 26%, 7/1/16, 1/21/16 - 6/15/16; 2015: 1822, 277, 15%, 8/1/15, 1/21/15 - 6/15/15; 2014: 6776, 409, 6%, 8/1/14, 1/21/14 - 6/15/14; 2013: 1694, 280, 17%, 8/1/13, 1/21/13 - 6/15/13; 2012: 1083, 267, 25%, 8/1/12, 1/21/12 - 6/15/12.
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Bing Michael is a registered representative and investment advisor representative of Lincoln Financial Securities Corp., a broker/dealer (member SIPC) and registered investment advisor, 7030 Ellington Farm Lane, Charlotte, NC 28227 offering insurance through Lincoln affiliates and other fine companies. This information should not be construed as legal or tax advice. You may want to consult a tax advisor regarding this information as it relates to your particular situation.


*Winners appearing on this page do not pay a fee to be considered or to win the Five Star Award. Professionals with a digital profile have paid a promotional fee.
Wealth managers do not pay a fee to be considered or placed on the final list of Five Star Wealth Managers. The award is based on 10 objective criteria. Eligibility criteria-required: 1. Credentialed as a registered investment adviser (RIA) or a registered investment adviser representative; 2. Actively licensed as a RIA or as a principal of a registered investment adviser firm for a minimum of 5 years; 3. Favorable regulatory and complaint history review (As defined by FSP, the wealth manager has not; A. Been subject to a regulatory action that resulted in a license being suspended or revoked, or payment of a fine; B. Had more than a total of three settled or pending complaints filed against them and/or a total of five settled, pending, dismissed or denied complaints with any regulatory authority or FSP's consumer complaint process. Unfavorable feedback may have been discovered through a check of complaints registered with a regulatory authority or complaints registered through FSP's consumer complaint process; feedback may not be representative of any one client's experience; C. Individually contributed to a financial settlement of a customer complaint; D. Filed for personal bankruptcy within the past 11 years; E. Been terminated from a financial services firm within the past 11 years; F. Been convicted of a felony); 4. Fulfilled their firm review based on internal standards; 5. Accepting new clients. Evaluation criteria-considered: 6. One-year client retention rate; 7. Five-year client retention rate; 8. Non-institutional discretionary and/or non-discretionary client assets administered; 9. Number of client households served; 10. Education and professional designations. FSP does not evaluate quality of services provided to clients. The award is not indicative of the wealth manager's future performance . Wealth Managers may or may not use discretion in their practice and therefore may not manage their clients' assets. The inclusion of a wealth manager on the Five Star Wealth Manager list should not be construed as an endorsement of the wealth manager by FSP or this publication. Working with a Five Star Wealth Manager or any wealth manager is no guarantee as to future investment success, nor is there any guarantee that the selected wealth managers will be awarded this accomplishment by FSP in the future. Visit