Retirement may be a departure from the daily job related work, stress and deadlines but it also has its own risks. However, there are ways through which one can minimize such risks. A bit of prudent behavior and wise thinking are the tricks to combat the risks involved in retirement.
Having a fair idea of the various risks involved can help you to prevent these from taking place. Some of the risks that are involved in retirement are:
Risk of longevity: This is one of the biggest risks involved in retirement. Although traditional pensions, payout annuities and Social Security benefits do take care of the retirees, at times they are not sufficient in case of higher longevity. In order to cope up with the problem, one can go for other sources like reverse mortgages, lifetime annuities and so on.
Inflation: Inflation can pose a big problem in case of retirees. Inflation leads to higher price level and cost of living. This is a problem for the retirees as they have fixed sources of income. At times it gets very difficult for them to cope with the rising expenses. To cope with the risks, you can invest in common stocks, inflation-indexed annuities, inflation-indexed Treasury bonds or TIPS and so on.
Risk of interest rate: At times, the rate of interest can pose a big problem for retirees if they become less on both short and long term insurance. To overcome this retirement risk, you can put money in immediate annuities, mortgages or dividend paying stocks, long term bonds and so on.
Risks of business: If you are in some type of business after retirement, one of the main risks is that you may fall into some kind of losses. To manage these types of risk, you can apply for the defined-benefit pension plans.
In addition to these, there are also some other risks in retirement are public policy risks, emergency health-care needs, housing change needs, marital status change needs, fraud, theft and others. To make these risks, you need to act wisely and deal with the situation accordingly to improve the situation.