5 Key Retirement Risks: 1 Move to Help Address Them All

Whether we like to think about it or not, retirement can leave us exposed to a range of financial risks. And we can help ensure retirement is the reward it was always meant to be by addressing these potential challenges head-on.

Fortunately, there is one retirement strategy that can help retirees address some of the key financial risks they could face in retirement. But first, let’s review five key risks:

1. Longevity risk - the risk of outliving their money is a real concern for retirees. Thanks to advancements in medicine and healthier lifestyles, Americans are living longer. While living to 100 could be a wonderful gift, proper planning is needed to help ensure our money can last as long as we need it to.

2. Sequence of returns risk - timing is everything, and how the market performs in retirement, or the sequence of returns, can impact the longevity of our portfolios in a big way. If retirees incur losses a few years before or after retirement, they could face the challenge of running out of money years before they anticipated. In the video clip below, retirement author, Tom Hegna, explains the sequence of returns risk and its potential impact on retirees:


3. Deflation risk - deflation can be defined as the opposite of inflation, where the prices of goods and services decline instead of increase. While lower prices can seem like a good thing, if they stay too low for too long, it can have real consequences for the job market, forcing companies to lay off workers and sending the economy on a downward turn.

4. Market risk - as you may know all too well, the stock market is subject to ups and downs that can seemingly change in an instant. This volatility can lead to higher returns while saving for retirement, but when it’s time to live off of your nest egg, this same volatility can put retirees at risk.

5. Withdrawal rate risk - retirees need to determine the rate of withdrawal they should take out of their investments to live off of each year. The general rule of thumb is 4 percent, but that may not be the ideal withdrawal rate for everyone. And if retirees withdraw too much early on, it may leave them with a shortfall later in life.

So, how can retirees help reduce key financial risks in retirement? Guaranteed lifetime income.

When it comes to retirement, there are several strategies out there, and one single approach may not be ideal for everyone. However, when retirees use a portion of their assets to secure retirement income that is guaranteed for life, they help protect themselves from several potential risks, including all five of the retirement risks mentioned above.

There are three sources of guaranteed income:

  • Pensions
  • Social Security
  • Annuities

By the time we near retirement, our pensions — if any — and Social Security benefits have already been established, leaving only one remaining source available for helping secure the additional guaranteed income we may need in retirement. While there are many types of annuities, Heyday recommends fixed index annuities* as a tool for generating predictable income for life.

To learn more about how to help protect yourself from retirement risks and the importance of guaranteed lifetime income, attend the online workshop, 4 Steps to Help Secure Your Retirement.


*Fixed index annuities are not a direct investment in the stock market. They are long-term insurance products with guarantees backed by the issuing company. They provide the potential for interest to be credited based in part on the performance of specific indices, without the risk of loss of premium due to market downturns or fluctuation. Although fixed index annuities guarantee no loss of premium due to market downturns, deductions from your accumulation value for additional optional benefit riders could under certain scenarios exceed interest credited to the accumulation value, which would result in loss of premium. They may not be appropriate for all clients.

Ready to help secure your retirement with guaranteed income for life?

Try the Retirement Income Planner App 

Cindy Collins

Written by Cindy Collins

Forbes Contributor & Retirement Financial Professional

Cindy Collins is a Heyday Retirement contributor with over 30 years of experience in personal financial services.

Heyday is a premier source for comprehensive tools and informative content designed to help retirees build a secure retirement income plan.

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