Retirement Portfolio Discussions
Preparing Retirement Portfolios for Income Needs
Realize that one of the biggest risks to clients is outliving their money in retirement
- As life expectancies continue to rise, so does the risk of outliving retirement assets.
- Once investors reach retirement age, as shown on page 5, they are likely to live longer than the average life span.
- For a couple at age 65, there is an 90% chance one spouse will live to 80 and a 48% chance of one reaching 90.
Factor in above-average inflation when planning investments
- Retirement-age Americans are hit hardest by inflation, due largely to rising medical costs.
- The average retiree spends more on health care compared to those approaching retirement.
- Short-term investments may provide little or no real return after inflation.
Many Americans contemplating retirement are reasonably concerned about planning for their medical expenses
- This chart illustrates the current range of total out-of-pocket health care costs experienced by today’s 65-year-old, and how those costs may increase over time. Median costs today are about $5,140 per person at age 65. These costs are projected to more than triple over the next 20 years.
- Because retirees tend to consume more health care as they get older, it is appropriate to assume 6.5% annual cost increases during retirement.
- To plan for these rising costs over retirement, retirees should consider having sufficient growth and income-generating investments to cope with these expenses.