Handling Risk in Retirement
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First, are we clear what risk is?​

How much & what kinds are you willing to take on?

Perhaps a better question -- how much risk have you taken on already without being totally aware of doing so?

Most common investment risks

  • Risk to Principal
  • Inflation Risk
  • Business Risk
  • Interest Rate Risk
  • Income Tax Risk
  • Opportunity Risk

Understanding risks in retirement

  • how much “risk” you are willing to take on depends on your emotional makeup and your financial situation
  • You have 3 ways to deal with it: you can avoid it, manage it, or transfer it.  Actually, a 4th way—combination of the 3
  • Identifying your best intersection of emotional acceptance of risk and financial situation is where we can help you.

Examples:
  1. Risk you avoid. As lovely and inviting as an Aspen, Colorado ski lodge and slope may appear, you conclude that, in recognition of being “a certain age”, now may not be a good time to learn a new sport that can be taxing on one’s joints and bones–as well as painful and expensive to repair.  You avoid it. And enjoy good company and a warm fireplace in the clubhouse instead.
  2. Risk you manage. You accept the cost of Medicare-covered expenses which you are liable for up to a certain maximum per year. So, you count on your Medicare Advantage plan to pay any charges greater than, say, $3,400 annually. Or, another plan with premiums and benefits you like has a maximum charge you are responsible for of $6,700. You are willing to take the physical risk (on the Beginner’s Slope, ha ha). You manage that level.
  3. Risk you transfer. You give the tickets to your adult daughter, who then passes them along to her child– the risk still exists, but you transferred the risk to someone better equipped to handle it.

Understanding where you are on the risk palette is vital. It is likely to be very different in different personal settings and circumstances. And it is likely to change over time. But it is key to account for it. How we can help:
  • Identify a workable strategy with a high probability of success
  • Be alert to the obvious and the not-so-obvious “gremlins” that seek to ruin your plans
  • Where financial products are involved in the strategy, make certain that they afford you the highest intersection of value (cost vs benefit), probability of doing what they are supposed to do within your plan, and tax efficiency. 

​The sooner we start, the sooner things start to get better for you. Let’s start.

How can we help you today?