Unearthing Three Harsh Realities of Retirement

As you prepare for retirement, it may be helpful to know that there are some potential realities that traditional retirement advice may overlook or ignore.

A few of these were highlighted in “3 Harsh Realities Retirement Advice Almost Always Ignores,” an article published on Yahoo Finance on June 24, 2019. Let’s dig into each of these realities.

It’s common for people working on their retirement strategy or savings goals to hear the same kind of advice over and over. Save more, invest wisely and be aware of the risks that can pop up before and during retirement. That seems like an easy idea in theory. But in practice, it can be much harder to do.

One thing you don’t always hear acknowledged is how hard it can be to save instead of spend. If you want to save more and accumulate wealth, you have two choices: spend less or earn more. This leads to many additional options, like getting a second job or developing new budgeting techniques. The harsh reality is that most financial planning early in life demands sacrifice.

Our consumer-driven society encourages immediate gratification. Saving for enjoyment down the line is responsible and smart — but is rarely fun. To overcome this challenge, you must be prepared to skip some popular trends. It may require you to live a life that’s different from most of your friends and family.

A second piece of advice that isn’t always discussed is that you may need to overcome the fear of losing everything. Striking out on your own and finding your own path to financial security is never easy. It’s also never easy to overcome the fear of losing. For example, you may say that you’re going to stick to your financial strategy no matter what the market does, but it’s much harder to follow through on that plan when the market is volatile. Bad news gets headlines and market downturns can inspire any investor to look at changing course. It can be helpful to try to avoid the 24/7 media frenzy that the stock market can create and stick to your plan.

A helpful tool in this process can be to examine your risk tolerance. A financial services professional can help you with determining your risk tolerance and an investment mix that aligns with it. You should note that asset allocation doesn’t guarantee a profit or protect against loss. All investing involves risk, including the possible loss of principal. Working with a professional can help you align your investments with your risk tolerance and potentially protect some of your emotions from this roller coaster effect.

Finally, you should know that you can’t possibly prepare for every financial risk or scenario. Understanding your risk tolerance allows you to examine which options may be a fit for you, but it’s impossible to get rid of all risk. Challenges like unexpected healthcare costs or long-term care changes could be around the corner. It’s possible that the next big upheaval related to retirement is a scenario that we can’t even imagine.

These realities shouldn’t discourage you from moving forward with your retirement dreams. They may have affected your financial strategy in the past, but hopefully by talking about them today and putting them in the spotlight, you’ll gain the confidence you need to continue your financial journey.

The reality is, retirement is coming whether you’re ready or not. But working with a financial services professional may help you feel a little more prepared.

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