Risk management is about helping protect you, your family, and your assets from negative financial consequences that could arise. Our risk management services are designed to identify potential threats, like stock market drops, rising healthcare costs, and longer life expectancies, and create specific strategies to help mitigate them.
Why Market Risk Changes After Retirement
Market risk is one of the most important considerations for retirees because the timing of investment losses can significantly affect your long-term financial security. Specifically, if you follow a withdrawal strategy like the 4% Rule, sequence of returns risk can decimate your portfolio if you happen to experience market downturns at the beginning of your retirement when your balance is at its highest.
It’s important to reduce market risk before and during retirement, and diversify your holdings with strategies that are not correlated to the stock market.
Common Retirement Risks Scottsdale Residents Should Consider
Retirement looks different for everyone. Where you live in, your health, your lifestyle, and your goals all play a role in shaping the type of plan you need. For Scottsdale retirees, common considerations include healthcare costs, inflation, housing and insurance expenses, longer life expectancies, and even climate-related expenses.
- Longevity Risk: A long retirement is what many hope for, but it also means your retirement savings may need to last for decades. Medical advances mean more people are living into their late 80s and 90s than ever before. With this in mind, planning for a longer retirement can help ensure your income keeps pace with your needs over time.
- Healthcare & Long-Term Care (LTC) Risk: Healthcare expenses can become a larger part of your budget as you age. Medicare may cover many healthcare needs, but premiums, deductibles, prescriptions, and potential long-term care costs can still add up.
- Inflation Risk: While inflation risk exists in all phases of financial planning, it takes on a specific form in retirement income planning, reducing your purchasing power over time. A retirement plan should account for the possibility that your expenses may look very different 10 or 20 years from now.
- Housing & Insurance Risk: Rising property taxes, homeowners insurance, repairs, and maintenance can all put additional pressure on a retirement budget. For Scottsdale retirees, reviewing these expenses as part of your overall plan can help you prepare for changes down the road with preparing for rising costs and maintaining financial flexibility.
- Heat & Climate Risk: Arizona’s desert climate can mean higher utility bills during the hottest months of the year, along with added home maintenance and cooling costs. Factoring these seasonal expenses into your retirement budget can help you avoid unexpected financial surprises. For example, plan for higher utility expenses from July through September, budget for routine HVAC maintenance and other cooling-related needs, and consider energy-efficient home improvements that may help offset long-term costs.
Building A More Resilient Financial Plan
While everyone is different and no one can predict what retirement will bring, having a well-designed retirement plan and a financial advisor you trust can help you better prepare for the unexpected, helping you feel more confident because you have strategies in place. Whether you’re approaching retirement or already enjoying it, reviewing your financial plan regularly can help ensure it continues to reflect your changing needs, priorities, and long-term goals.
You shouldn’t be doing it all alone, if you’d like to review your retirement strategy or discuss ways to help manage risk, we are your financial advisors in Scottsdale AZ. Contact Premier Southwest Planning Group today at (480) 621-3646.
Sources
https://retirescorecard.com/states/arizona.html
https://www.retirementriskiq.com/states/arizona
https://shoppingannuities.com/learn/inflation-risk
https://www.investopedia.com/terms/r/riskmanagement.asp
