3 Financial Risks To Your Retirement
3 Financial Risks To Your Retirement
“Risk comes from not knowing what you’re doing.” Warren Buffet
As humans, we mitigate risk on a daily basis.
We wash our hands, buckle up, take the stairs, track our steps…. Maybe you count your calories, watch your sugar intake, make your kids eat their veggies. Every day we do things out of habit to mitigate our future health risk.
What about the risk to your Financial Health?
Discipline with a diet or exercise routine is the same as having discipline with a budget and savings goals. Financial health describes the state of your personal monetary affairs. There are a few factors to measure against. Such as savings amounts, retirement amounts, and spending habits. Strong financial health may include a steady flow of income, rare changes in expenses, strong returns on investments, and a growing cash position.1
In this blog, I have outlined the top 3 financial risks to the health of your retirement portfolio.
One of the top three financial risks to your retirement portfolio is Structural Risk. Structural Risk is the framework to build your plan upon. What tools are available to store your retirement savings. Are you contributing to a 401k, IRA, or a brokerage account? If you change jobs, access to a 401k may change. Who are you going to ask for advice?
Mitigating Structural Risk includes creating a plan and a goal that can be adjusted and changed as life changes.
The second top risk to your retirement is Market Risk. Market Risk is an investment that may have a variable performance. Anything related to the market like investing, stocks, bonds, or variable insurance products which aren’t guaranteed against losses. The value of your market portfolio is at risk and could swing up or down depending on economic variables. Those variables are out of your control. Real estate investment could also have Market Risk with the possibility of property value moving up or down.
As a financial advisor, I recommend positioning your Market Risk so your gains outpace your losses over the long term.
The final risk to your retirement is Tax Risk. Tax Risk could be the biggest factor affecting your retirement portfolio in the next 10 years. How much of your retirement money will you be able to keep and how much will you end up paying to the government? In your 401k plan, you have deferred paying the tax on that money until it is withdrawn. Making your contribution through your paycheck is a great way to build retirement wealth, thinking when you retire you will be in a lower tax bracket and will pay a lower tax rate. That may not be the case in 10 or 15 years. Would you be interested in using a tool to mitigate your future Tax Risk and potentially avoid paying more taxes than necessary? For more information on taxes click here for our booklet, “Take Control Of Your Taxes”
Every four years the tax code is up for re-election. We can make a plan for your structure risk, plan for your market risk and now let’s make a plan for your tax risk.
Let our professionals at The Resource Center help you make a game plan to track your retirement portfolio and the amount of tax you will pay over your lifetime. Having a tax-efficient plan is just as important as a retirement plan. Contact us today at, 417-882-1800 or click here to schedule an appointment.
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We are not permitted to offer, and no statement contained herein shall constitute, tax or legal advice. Individuals are encouraged to consult with a qualified professional before making any decisions about their personal situation. We are able to provide you with information but not guidance or advice related to federal benefits. Our firm is not affiliated with the U.S. government or any governmental agency. All investments are subject to risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values. The Resource Center is an independent financial services firm that utilizes a variety of investment and insurance products. Investment advisory services offered only by duly registered individuals through AE Wealth Management, LLC (AEWM). AEWM and The Resource Center are not affiliated companies. Information and opinions contained herein that have been obtained from third-party sources are believed to be reliable however accuracy and completeness cannot be guaranteed. This content is provided for informational purposes only and is not intended to serve as the basis for financial decisions. 00858992 03/21