Pre-retiree CPAs are entering a retirement planning period that is uncertain right now. With a bear market lingering, inflation still at record levels, and rising interest rates, not knowing how to combat these or approach your retirement planning this year can be challenging. This environment leads to more questions than answers. Here is a list of things to keep in mind moving forward to help get closer to a safer retirement.

  1. Understand Market Risk – There is not doubt that you will live to see more than one market downturn. Your finances will take a hit before retirement and even during retirement, but that doesn’t mean you can’t prepare. The sooner you can save for retirement, the better off you are for those golden years. If you are able, begin moving your money into principal-protected investments and accounts as you near retirement to protect your hard-earned money. Mitigating sequence of return risk is not an easy task but limiting the risk exposure earlier in the game is a great strategy.
  2. Inflation, the silent killer – Impacting your spending and buying power, inflation is known to take even a well-planned retirement and turn it upside down. Everything you saved during your working years becomes less in retirement—increasing daily expenses such as food and transportation. You burn through your money faster than planned. There may be ways to offset the impact inflation may have to some extent such as cutting back on other expenses or fun activities but rising prices on daily expenses are not the only things that inflation impacts. With age comes more health and medical issues, and healthcare costs are predicted to out pace inflation. Inflation adjusted products are your best bet to combat the silent killer of retirement.
  3. Do you have a healthcare plan? With medical and healthcare costs predicted to rise over the next several decades, it is important to plan accordingly. And again, with age comes more health issues typically. Medicare may only cover so much for long-term care should you need it, and you may need more than just one policy or way to pay for medical, health, and long-term care during your retirement years. The average couple in the coming years is expected to pay well over $300,000 alone between out-of-pocket costs, premiums, copays, and even prescriptions. This does not factor long-term care.
  4. Plan for the unexpected – As a CPA you are familiar with how things never go as planned, and the same can be said for retirement. There are events in life that cannot be controlled, but they can be planned for just in case those what-ifs do arise. Retirees are staying longer in the workplace, but many are being forced to retire early due to unforeseen events. If you are planning to retire later in life, it is still a good idea to have a plan in place for if you must retire much earlier than expected. This way you can account for if it does happen.
  5. Risk-Based Approach – The bear market, inflation, rising health care costs, and even longevity still on the up and up has many CPAs and their clients worried that retirement funds will not last. Understanding what risks you will face during retirement is the best way you can ensure that you will not outlive your own retirement savings. A Risk-Based Retirement Plan provides trajectories that are custom-made to your retirement goals and needs so you are able to live a long retirement without worrying about your money, providing a peace of mind for how your money will work for you during retirement and even after you are gone.