Retirement Fears

Daniel Ruedi, CFP®, RICP® 

Working with retirees and people approaching retirement puts you in touch with the many fears people have about retirement. In honor of Halloween, I want to cover some of the most common fears people have about retirement and how a financial advisor can use a financial plan to address them.  

The most common fear among retirees, by far, is running out of money. This fear is the result of life without a paycheck. Retirees have to live off the savings they have built up, so it's natural to worry about whether your savings will last the rest of your lifetime. 

A financial advisor can address this fear by developing a retirement plan that determines how much you can spend without running out of money. An advisor can also help you adjust your initial plan if a severe market decline shows up. Temporarily reducing your spending during market declines can provide additional protection against depleting your assets due to poor investment returns.  

Many pre-retirees are afraid they won't be able to retire as early as they want or maintain their current lifestyle once they retire. An advisor can build a retirement plan that shows whether or not you are on track to reach your retirement goals. Many people are pleasantly surprised to find out that they are on track to meet or exceed their retirement goals if they continue their current path. If you aren't on track to achieve your goals, advisors can suggest adjustments you can make to ensure you reach them.  

Getting close to your target retirement age, or being retired, also heightens the fear of large bear markets. This fear is certain to become a reality at some point because market declines are an inevitable part of investing. Historically speaking, we can expect to see one, every five years. However, market declines should not be a problem if you plan properly. 

A good financial advisor will build your retirement plan to withstand the inevitable market declines that come along during your lifetime. The bigger concern when a temporary decline happens, is how you will behave. Getting spooked and selling out of your investments can turn a temporary decline into a permanent loss. An advisor can be the calming voice in times of crisis that prevents you from making an irreversible mistake. 

Life without a paycheck can be scary. But, a sound financial plan can address your retirement fears and prevent them from becoming a reality. If you aren't sure how to build a plan that addresses the most common retiree fears, you may want to talk to a retirement planner. 

Daniel Ruedi is a CERTIFIED FINANCIAL PLANNER™ professional with Ruedi Wealth Management in Champaign, Illinois.