Financial risks can strike at any time and can have a devastating impact on your retirement savings. Which risks should you be aware of? Let’s take a look at a few of the most critical risks:
"Black swan" events
Impossible to predict, black swan events swoop in out of nowhere and strike hard. The 2001 dot-com bubble, 9/11, and the coronavirus pandemic are all examples of black swan events, which can have a negative impact on your retirement savings.
Market volatility
Beyond these outliers, retirement income can also be impacted by normal market volatility. And if the market dips in the very early years of your retirement, it can have an even greater impact on retirement savings (this financial phenomenon is known as sequence of returns risk).
Inflation
The rate at which the price of goods increase—otherwise known as inflation—can dramatically reduce the buying power of your savings. Case in point: assuming a 4% annual inflation rate, $219 in 2042 will only be able to purchase the equivalent of $100 worth of today's goods. As we've seen, inflation can even reach 9% or more, which can severely diminish retirement income.
Healthcare
Many people underestimate the cost of healthcare in retirement. According to Fidelity Investments, an average, healthy 65-year-old couple retiring in 2023 will spend $315,000 on their healthcare costs throughout retirement. While we all hope that we'll be as healthy as we can for as long as we can, that's not always the case. The cost of battling a serious disease can run into the millions, and according to LongTermCare.gov, someone turning age 65 today has almost a 70% chance of needing some type of long-term care, which can be a serious drain on retirement income.
Creating a retirement income shield
Whether it’s a black swan event, market volatility, inflation, or a healthcare emergency, financial risk can strike at any time and without warning. So how can you guard against financial risks? The answer is guaranteed retirement income. Instead of being at the whim of the market, you can enjoy the reliability of guaranteed retirement income with Income America™ 5ForLife. This all-in-one retirement investment provides retirees with 5% income for life—guaranteed.1 Conveniently available through employer-sponsored retirement plans, Income America 5ForLife can help offer protection against market uncertainty and financial risks.1 If the joint option is elected, the participant’s payout will be lower than 5%, depending on their age and their spouse’s age.
With Income America 5ForLife, you can get a reliable stream of retirement income and can plan for your future with confidence. Here’s how it works:- You invest in Income America 5ForLife through a plan that your employer has set up. You can contribute via payroll deductions rollover assets from a previous employer’s plan, and/or transfer money from other plan investments.
- Every dollar you invest counts toward your income base.2 Thanks to the annual step-up feature, every year on your birthday, your income base can re-set, stepping up to lock in any gains.
- When you retire at age 65 or older, you receive annual income payments of 5% of your income base for the rest of your life—guaranteed.2
Preparing for future retirement income
Now’s the perfect time to guard against future financial risks. Learn more about Income America 5ForLife today.2 The market value of your account is never guaranteed and fluctuates based on investment performance. To receive the guaranteed income, you must stay invested in Income America 5ForLife. If you withdraw more than the guaranteed income in any year, your income base and future guaranteed annual income amount will decrease. Guarantees are subject to the claimspaying ability of the issuing companies.
