There are many aspects to consider when thinking about mitigating risk in retirement. Here are two categories we often recommend in order to shape the conversation around retirement income planning. Remember, there are a number of other risks to consider and discuss with us at any time.

Category 1: Risks That You Have Some Control Over

You may not be in total control, but you can influence these variables.

  • Your Savings Goal: It may take a lot of discipline, but setting a retirement savings goal and sticking to it is essential. Unfortunately, we can’t turn back the clock if your retirement date comes and the assets you’ve built simply won’t generate the income you need.
  • Retiring Too Early: We see plenty of situations where individuals are forced to retire for health reasons. We also see those who chose early retirement and then they realize that expenses are outstripping their income, or unplanned expenses take a significant chunk out of their retirement assets, reducing their income. That’s why it is critical to stress test your portfolio before you retire to determine the impact that various scenarios (good and bad) will have on their retirement.
  • Spending Too Much: Retirement is a living, breathing thing. What this means is the portion of your income generated from assets may need to be reassessed as your personal or market circumstances shift over time. For example, during years in which you experience poor portfolio returns, you might choose to spend less. This helps to reduce the impact of withdrawing assets in market downturns and can actually help prolong the life of your retirement assets

Category 2: Risks That You Have Very Little to No Control Over

  • Longevity: No one knows how long they are going to live. In this case, we are talking about living longer, resulting in outliving your retirement assets. While this is often a top concern for investors, there are ways to counteract the impact of this risk. Income sources that are guaranteed for life, such as pensions and annuities, may be worth considering if they align with your individual needs and preferences.
  • Inflation: Inflation impacts retirees more than anyone else. A “basket” of goods and services you might have paid $100 for in 1995 costs more than one and one-half times that amount today. Be cautious not to invest too conservatively, because some growth is needed to help counteract the erosive effects of inflation.
  • Financial Market Volatility: The markets cannot be controlled or timed. While volatile markets cause certainly cause calamity for investors, we suggest the same tried and true strategy of employing a long-term, asset allocation that fits your tolerance for risk and investment goals.

Working With Janney

Depending on your financial needs and personal preferences, you may opt to engage in a brokerage relationship, an advisory relationship or a combination of both. Each time you open an account, we will make recommendations on which type of relationship is in your best interest based on the information you provide when you complete or update your client profile.

When you engage in an advisory relationship, you will pay an asset-based fee which encompasses, among other things, a defined investment strategy, ongoing monitoring, and performance reporting. Your Financial Advisor will serve in a fiduciary capacity for your advisory accounts.

For more information about Janney, please see Janney’s Relationship Summary (Form CRS) on which details all material facts about the scope and terms of our relationship with you and any potential conflicts of interest.

By establishing a relationship with us, we can build a tailored financial plan and make recommendations about solutions that are aligned with your best interest and unique needs, goals, and preferences.

Contact us today to discuss how we can put a plan in place designed to help you reach your financial goals.

Janney Montgomery Scott LLC, its affiliates, and its employees are not in the business of providing tax, regulatory, accounting, or legal advice. These materials and any tax related statements are not intended or written to be used, and cannot be used or relied upon, by any taxpayer for the purpose of avoiding tax penalties. Any such taxpayer should seek advice based on the taxpayer’s particular circumstances from an independent tax advisor.

About the author

Jay Guyer

Vice President, Senior Financial Planner

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For more information about Janney, please see Janney’s Relationship Summary (Form CRS) on which details all material facts about the scope and terms of our relationship with you and any potential conflicts of interest.

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