What Is The Real Risk?
As much as we can focus on the risk of loss, that is not the only risk that matters. A person can consistently save a little each week for 40 years and invest that money very conservatively and never see a down year in their portfolio. However, that same person could find themselves 10 or less than 20 years into retirement with no money, then requiring total dependence on the Aged Pension, even though this investor was completely risk averse.
Investors should be aware that this risk of failing to accumulate enough assets to last through retirement is a real risk and a real problem to be addressed.
So, What To Do?
Firstly, plan for a healthy, happy retirement. Be very suspicious of any simple rule-of-thumb about how much to save or how to allocate and invest your hard-earned savings. Think carefully and seriously about what your actual retirement needs are and speak with a qualified investment advisor. Be informed, consider what your retirement goals are and how you will be able to achieve them. Be honest with your advisor. If you can not speak openly and honestly with the advisor you have chosen, find another to whom you can speak openly and honestly. Remember the advice may cover such issues and recommendations that you don't like - such as your need to lower your spending expectations in retirement, save more today, seek higher investment returns, or perhaps all three plus others for you to consider. Be informed and carefully consider your appetite for risk - you may consider that the risk of running out of money in retirement is worse than losing some money today, and that the long-term benefits of diversification outweigh the risks.
For further information speak with a Leenane Templeton Financial Advisor
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