Watch this video to understand the 5 key risks that could impact your income stream in retirement, and how to manage them. To find more resources about retirement income, visit: https://www.fidelity.com/calculators-tools/retirement-income-planner To see more videos from Fidelity Investments, subscribe to: https://www.youtube.com/fidelityinvestments Facebook: https://www.facebook.com/fidelityinvestments Twitter: https://www.twitter.com/fidelity Google+: https://plus.google.com/+fidelity LinkedIn: https://www.linkedin.com/company/fidelity-investments ------------------------------------------------------------------------------------------------------ When saving for retirement, you know it is important to diversify your investments to manage risk. But once in retirement, there is a different set of risks that can impact a person’s income stream. Longevity, inflation, withdrawal rate, market volatility, and health care are the 5 key risks that you should be familiar with…let’s learn a bit more about each one. Longevity. Who is the longest-living person you’ve ever known? This person was probably in his or her 90s…or maybe even 100. Hard to believe we might live to our 90s…but it’s true. People are healthier and more active today. Your retirement could be 25…30…35 years long – maybe even longer than your working years. Consider Mary and Tom…married, both are 65. There is a 50% chance that at least one of them will live to be 92, and a 25% chance of one living to 97. What does this mean for your retirement? Without a well thought out income strategy, you could easily outlive your savings. Inflation. Prices seem to just go up, never down. Think back to 1990…did you go to the movie theater to see “Home Alone”? Your ticket cost probably cost about $4.22… Go to the movies today, and it costs on average $7.96 – that’s 88% more! And if you stopped and filled up your car with gas on the way there? That was about $1.16 per gallon, but today it’s $3.64 – a whopping 214% more! What does this mean for your retirement? The cost to support your lifestyle in retirement will continue to grow. It’s important to have a plan to help keep up with inflation by including investments with income growth potential. Withdrawal Rate. As you think about your retirement, once you transition, you will start tapping into that nest egg you’ve built. But what’s the right withdrawal rate for you? And should it change throughout retirement? These are 2 very important considerations. Withdrawal rate is the percentage you take out of your portfolio annually. The amount you take can directly impact how long your assets might last in retirement. A common rule of thumb is to use a withdrawal rate of 4% per year, adjusted annually for inflation. This translates into $4,000 in annual income for every $100,000 in savings. The good news here is that your withdrawal rate is something that you can control and adjust as needed to take into account your age, health, availability of other assets, and desire to leave money for your heirs. Fidelity suggests that you also consider other factors such as inflation, market conditions, interest rates, and your asset allocation when determining your own withdrawal rate. What does this mean for your retirement? Take out too much from your nest egg too soon, and you may run out of money…take out too little, and you may have to make some tough decisions about prioritizing needs and wants. Discipline is very important, as is monitoring and rebalancing your portfolio and making proper investment selections, throughout retirement. Market Volatility. The market’s up, the market’s down…unless you have a crystal ball, there really is no way to know what will happen in the future. As we all remember, back in 2008, the S&P 500® Index experienced a 57% decline in just 18 months. And things did turn around after that, with the index experiencing a 173% increase through 2013. [....] Fidelity Brokerage Services LLC, Member NYSE, SIPC, 900 Salem Street, Smithfield, Rhode Island, 02917 700496.3.0
Visibility: 10833
Duration: 5m 52s
Rating: 35