You have dreams for retirement. But you need to understand six common risks most retirees face and take steps to protect your retirement dreams from these risks:

1. Health care expenses. Medical costs have risen at more than twice the rate of overall inflation in recent
decades.1 That trend is especially problematic for retirees, who on average spend a greater percentage of their income on health care costs. The Employee Benefit Research Institute estimates that the average husband and wife who turned 65 in 2010 will need roughly $250,000 in savings to pay for health care expenses not covered by Medicare during their retirement.2 Imagine how high these costs could be when you retire.

2. Unexpected events. Unplanned developments in your life can have a major impact on your finances. Some may be personal: a lawsuit, a family member in need. Others may be external, such as changes to tax laws, Social Security or a pension. All of these events could force you to withdraw money from savings and perhaps even jeopardize your retirement accounts.

3. Market volatility. The growing interconnectedness of world economies and the ever-increasing speed of global capital flows have made the markets more volatile than ever. If you don’t have a sound investment plan coupled with an emergency cash strategy, a large drop in financial markets at home or abroad could reduce the value of your retirement accounts. Volatility can be particularly damaging to a portfolio during retirement when you’re withdrawing assets; selling long-term assets at depressed levels can reduce the value of your portfolio, forcing you to lower your income in retirement.

4. Longevity. The risk of outliving one’s assets is of great concern in a time of rising life expectancies and earlier retirements. The average 65-year-old man can expect to live more than 20 years, while the average 65-year-old woman is likely to live at least 23 years. And if you’re married, you have an excellent chance of living longer: A 65-year-old couple faces a 50% chance that one spouse will live past 92, and a 25% chance that one spouse will live to 97.3

5. Inflation. Some economists believe inflation is likely to climb in the years ahead. But even at low rates Inflation can deteriorate the buying power of your savings. In fact, 24 years from now, inflation will nearly double the cost of living for the typical consumer, based on the historical annual average of 3%.

6. Withdrawal rate. Pulling too much from savings early in retirement increases the risk that you could outlive your money. That’s because early withdrawals can leave you with a smaller asset base, which means less opportunity for growth over time. 

Each of these risks can build on the other, making it crucial to manage them all properly. For example, a
market downturn could reduce the value of your retirement accounts, increasing the risk that excessive withdrawals could exhaust your savings early.

By taking action today, you have the potential to make your retirement everything you’ve always dreamed of.
An Ameriprise financial advisor can help you construct a complete plan that includes solutions to address these risks while also helping you meet your financial objectives — all within the context of your individual situation and goals — so you can feel more confident about retirement.



1Bureau of Labor Statistics, February 2011. Refers to period 1965–2010.
2 “Savings Needed for Health Expenses in Retirement: An Examination of Persons Ages 55 and 65 in 2009”, Employee Benefit Research Institute, June 2009.
3Annuity 2000 Mortality Table.

Authored by: Brian White

Brian White is a Financial Advisor and an Associate Vice President at Ameriprise Financial located in Melville. Brian has over seven years experience in the financial services industry and runs a successful financial planning practice.  Over his career as a Financial Advisor, Brian has achieved notable accomplishments that rank him among the top of his peers such as The Mercury Award, The First Year Top Achiever and The Circle of Success.   Brian is a member of the Advanced Advisor Group and has earned the Chartered Retirement Planning Counselor designation. Brian works with clients to design a personal financial plan based on their life goals. This strategy focuses on helping them become more confident about managing their financial objectives. It is designed to provide solutions to both the everyday and long-term financial questions and is personalized to meet the needs of high net worth individuals and small business owners. Brian and his staff continually monitor progress toward financial goals and update plans based on changes in market conditions and individual situations. Brian attended Adelphi University from 2000-2004 and graduated Cum Laude with a Bachelors Degree in Business Finance. Contact:  631-574.2973 | Fax: 631.582.4243 | Mobile: 631.871.2560 | Brian.X.White@ampf.com Do you REALLY know what a comprehensive financial plan is?  Listen to Brian's 1/2 hour segment on TimetoPlay.com's Empower Half Hour The information contained in this material is being provided for general education purposes and with the understanding that it is not intended to be used or interpreted as specific legal, tax or investment advice. It does not address or account for your individual investor circumstances. Investment decisions should always be made based on your specific financial needs and objectives, goals, time horizon and risk tolerance. The information contained in this communication, including attachments, may be provided to support the marketing of a particular product or service. You cannot rely on this to avoid tax penalties that may be imposed under the Internal Revenue Code. Consult your tax advisor or attorney regarding tax issues specific to your circumstances. Neither Ameriprise Financial Services, Inc. nor any of its employees or representatives are authorized to give legal or tax advice. You are encouraged to seek the guidance of your own personal legal or tax counsel. Ameriprise Financial Services, Inc. Member FINRA and SIPC. The information in this document is provided by a third party and has been obtained from sources believed to be reliable, but accuracy and completeness cannot be guaranteed by Ameriprise Financial Services, Inc. While the publisher has been diligent in attempting to provide accurate information, the accuracy of the information cannot be guaranteed. Laws and regulations change frequently, and are subject to differing legal interpretations. Accordingly, neither the publisher nor any of its licensees or their distributees shall be liable for any loss or damage caused, or alleged to have been caused, by the use or reliance upon this service.

There is 1 comment for this article
  1. Tom at 7:58 pm

    Get in a Health Savings Account at your employer and fund it to the max ($3,300 individual, $6,550 family and a $1,000 after age 55 catch-up) with pre-federal, state and social security tax money. Don’t touch it during your working career and in retirement you can take it out tax free for qualified medical expenses.
    Goes in tax free, builds tax free and comes out tax free – nothing like it.

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