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Founded in 1976, Bankrate has a long track record of helping people make smart financial choices. We’ve maintained this reputation for over four decades by demystifying the financial decision-making process and giving people confidence in which actions to take next. Bankrate follows a strict , so you can trust that we’re putting your interests first. All of our content is authored by and edited by , who ensure everything we publish is objective, accurate and trustworthy. Our reporters and editors focus on the points consumers care about most — how to save for retirement, understanding the types of accounts, how to choose investments and more — so you can feel confident when planning for your future. Bankrate logo Editorial integrity
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You have money questions. Bankrate has answers. Our experts have been helping you master your money for over four decades. We continually strive to provide consumers with the expert advice and tools needed to succeed throughout life’s financial journey. Bankrate follows a strict , so you can trust that our content is honest and accurate. Our award-winning editors and reporters create honest and accurate content to help you make the right financial decisions. The content created by our editorial staff is objective, factual, and not influenced by our advertisers. We’re transparent about how we are able to bring quality content, competitive rates, and useful tools to you by explaining how we make money. Bankrate.com is an independent, advertising-supported publisher and comparison service. We are compensated in exchange for placement of sponsored products and, services, or by you clicking on certain links posted on our site. Therefore, this compensation may impact how, where and in what order products appear within listing categories. Other factors, such as our own proprietary website rules and whether a product is offered in your area or at your self-selected credit score range can also impact how and where products appear on this site. While we strive to provide a wide range offers, Bankrate does not include information about every financial or credit product or service. Retirement is a time of great joy for many people, but it can also be full of uncertainty. , spending extended amounts of time with family, and taking up new hobbies are some of the ways in which a post-retirement life may look very different. However, retirees often face significant risks, especially when it comes to their finances. Older Americans might be aware of some of the risks, though. A from December 2021 found that just 14 percent of the silent generation is confident about their finances for 2022 compared to 51 percent for Generation Z. Rising health-care costs, market volatility, and inflation are just some of the risks that add to the financial uncertainty of retirement. These risks and more are among the things people need to keep in mind as they move closer to retirement. Top financial risks that retirees face
Retirement comes with several financial risks. Here are some of the biggest risks retirees face. Health care costs
Increased medical bills are inevitable for most of us as we age, and that could spell trouble without proper planning. Fidelity estimates the average couple aged 65 in 2022 will need approximately $315,000 to cover health care expenses alone during retirement. The exact cost may vary widely in each unique case, but this gives us an idea of . Part of the reason health care is so expensive for retired people is that Medicare may not cover all your health expenses. For example, long-term care, dental care, and hearing aids aren’t covered. Plus, the monthly premium for Medicare Part A can be up to nearly $500 in 2022. Market volatility
While is a powerful way to build wealth, the market can be quite volatile in the short run. The average in the U.S. lasts for 1.4 years, with an average loss of 41 percent, according to a report from investment management company First Trust. If these bearish conditions happen to crop up around the time you retire, it could be a major risk to your financial security. That’s why is a wise idea, particularly as you inch closer to retirement. Adding at the end of your career should help reduce your market volatility risk. Performance is never guaranteed, but bonds tend to be less volatile than stocks. Inflation
is a risk for retirees, especially in 2022, and particularly if you are no longer receiving cost of living increases from a job. Fortunately, Social Security does make on an annual basis. However, if you have a lot of money in cash and are living on a fixed income, inflation may year after year. Retirees often fight inflation by continuing to invest in stocks. While retirees usually have a lower allocation for stocks compared to people in their 20s, keeping a small stock allocation can help fight the effects of inflation. Other assets, such as Treasury inflation-protected securities (TIPS) or are consistently adjusted for inflation, which can also help. Running out of money
Running out of money is a significant risk for many retirees. Not only do retirees have insufficient savings in many cases, but people also live longer today than they did in decades past. If you are and worried you might run out of money someday, there are a few steps you can take. For instance, you can beef up your retirement savings, and increasing your contributions to a 401(k) or similar account. Other steps include delaying Social Security payments and . Delaying Social Security will increase your monthly payments. Annuities, on the other hand, let you buy a policy that will pay you a certain amount for life. Death of a spouse
There are several retirement risks that may stem from your spouse. For instance, if your spouse passes away, it could reduce pension benefits. It might also make it harder to pay for your monthly bills, as you and your spouse may have been splitting costs. So, you could be left picking up the tab. There are also funeral costs, which could be significant. Fortunately, there are some policies that can help reduce the financial risks associated with your spouse passing away. Life insurance and survivorship benefits from a pension plan are among the possible ways you could be compensated. Bottom line
Planning for retirement isn’t easy. In addition to the monumental life changes we must face when leaving the workforce, there can also be big financial risks. Medical bills, market risk, and inflation are just a few of the things that may threaten your financial security after you leave the workforce. Because things can be so complicated, it might be best to to help you put a plan together. They can help you assess your financial picture, figure out how much money you need, and plan your draw-down strategy to help you avoid running out of money. If you are worried about the cost of meeting with someone, a fee-only fiduciary financial advisor will help you keep costs down. Also consider the fact that while you will have to pay for this service, it will likely pay off in the long run. SHARE: Bob Haegele is a contributing writer for Bankrate. Bob writes about topics related to investing and retirement. Brian Beers is the managing editor for the Wealth team at Bankrate. He oversees editorial coverage of banking, investing, the economy and all things money. Related Articles