Preparing for the Unexpected in Retirement

There is a good piece by Linda Stern in Reuters that serves as a reminder of what a challenge retirement planning can be given the number of variables and what is potentially an absurdly long time horizon.

20 - 40 years is basically a lifetime, but this is the time period that most retirees are grappling with when they need to structure their finances for retirement.

The author of the Reuters piece discusses 5 different retirement planning uncertainties and how to potentially address them:

1. Early retirement -- have a back-up plan.
2. Higher taxes -- diversification among taxable and tax advantaged accounts.
3. Longevity risk -- buy an annuity.
4. Health and nursing needs - consider a long-term care policy.
5. Timing risk -- spend less early and ladder annuity purchases.

Source: Reuters

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