Lineweaver Financial Group
The Risk No One Wants to Talk About
Are you going to run out of money?
Most investors perceive risk in terms of the dollar amount they will or have lost over a relatively short period. They also perceive future risk in terms of events they worry could occur, such as a stock market crash, Treasury yields soaring because of the federal debt, or a global war or catastrophe. It's easy to understand why: These risks are easy to identify and potentially quantify.
What is much tougher for us to wrap our heads around is risk from the standpoint of longevity. This is the possibility of outliving your savings. From a purely financial standpoint, it is the key definition of risk you should be most concerned with.
The good news is that most police officers are able to retire with a strong pension, but will that be enough? Also, DROP has been added into the picture to create a nice nest egg to be used to supplement your pension in retirement. When you add DROP to your deferred compensation or other retirement accounts you were able to save on your own, you could be in a good position to have your assets more than last your lifetime. However, excessive distributions and improper management of your funds can have a negative impact on accomplishing that important feat.
What are you doing to help ensure you have saved enough and managed your portfolio in a manner that provides an adequate level of income on an inflation-adjusted basis in retirement? The decisions that you make throughout your career—including what you save, how long you work, how you allocate your portfolio and whether or not you panic during times of market turbulence— could help ensure you do not outlive your assets. In many cases, having professional guidance can really help take the emotion out of investing during turbulent market times. Too many times we see people in retirement that have too much of their assets at risk, even though they may not need or desire the potential high returns they could get by being solely in the market.
Unfortunately, whether our money will last our lifetimes isn’t always top of mind. Our minds don't do well with big numbers that are far out in the future. We think in the short-term and we don't do well with big, uncertain events. We certainly don't like thinking about exactly how many years we'll spend in retirement before the grim reaper comes or what our medical expenses might be like. It's simply easier to focus on potential risks that are currently more identifiable.
Having a properly allocated, diversified retirement portfolio could help prevent you from outliving your assets. Do you need help in crunching the numbers based on your pension, living expenses, age and retirement assets? If so, feel free to give us a call so we can help you get a better feeling on the longevity of your money.
Lineweaver Financial Group • 9035 Sweet Valley Drive, Valley View, OH 44125
Securities offered through Sigma Financial Corporation, member FINRA/SIPC. Lineweaver Financial Group is independently owned and operated. Diversification does not guarantee against loss or ensure a profit; it is a method used to help manage risk.