Studies show there are three consistent disrupters that may threaten your financial security over a 20-to-30-year retirement. Believe it or not, longevity tops the list followed by unexpected healthcare costs and stock market volatility. Although no one can predict the future, you can possibly mitigate the impact of these risks with one potential solution: a Fixed Indexed Annuity
Longevity: Outliving Your Money
There’s a big difference in the amount of retirement income you need to live comfortably over 30-year retirement compared to a 20-year retirement. Yet studies show Americans often underestimate their longevity. When this happens, the fear of outliving your money becomes a reality.
Miscalculating longevity may also create a significant loss of retirement income for your spouse. The latest CDC data indicates that women live 5.8 years longer than men — the biggest longevity gap in decades.
“As you age, there’s an ever-increasing likelihood you’ll need help with everyday activities like bathing and dressing yourself.”
Unexpected Healthcare Costs: Non-Medical Long Term-Care
When rising healthcare costs are combined with living longer, it compounds the risk of running out of money when you need it the most: in your later years. As you age, there’s an ever-increasing likelihood you’ll need help with everyday activities like bathing and dressing yourself.
Unfortunately, FEHB and Medicare will not cover the cost of non-medical, custodial care in a facility. If you haven’t purchased Long-Term Care insurance, you may need to cover out-of-pocket expenses that can run as high as $10,000 per month for a private room in a nursing home. These costs can wipe out your retirement nest egg over time.
Stock Market Volatility: Weathering Prolonged Bear Markets
As a FERS retiree, your annuity combined with your Social Security will make you somewhat less vulnerable to a volatile stock market. However, your Thrift Savings Plan (TSP) can be affected when there’s a prolonged bear market. In most cases, the best advice is to stay the course because the stock market usually rebounds. That’s why it’s important to re-balance your TSP investments to help minimize risk during market dips.
One Possible Solution: A Fixed Indexed Annuity
A Fixed Indexed Annuity is an insurance product that can serve as a single solution for all three of these threats. It provides a guaranteed stream of income for as long as you live while protecting your accumulated value against stock market volatility. In addition to providing a guaranteed death benefit for your survivors, you can add a Long-Term Care rider. An FRC® trained advisor can provide you with more information on annuities and other insurance products that can help provide financial security in retirement.
