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Keep Calm And Ride Out The Market Fluctuations


The authors of Freakonomics have pointed out numerous examples of how people devote lots of energy to worrying about events that are only a remote possibility, while having no fear of situations that, purely from the point of view of probability.  If the Freakonomics authors went to Florida, they would probably immediately notice that most of the people who avoid canoeing for fear of alligator attacks travel in cars on a daily basis, and the chances of a car accident are much higher than the chances of an alligator attack.  Researchers at the Center for Retirement Research at Boston College recently published a study showing that the biggest threats to retirees’ savings lasting them for the rest of their lives are not the ones that the retirees worry the most about.  There are plenty of ways to save for retirement and plenty of expenses that threaten to put a dent in your retirement savings.  A Tampa estate planning attorney can help you make the best decisions so that your retirement savings will last for the rest of your life.

How Worried Should You Be About Your Retirement Savings Running Out?

The Boston College study focuses on the five main reasons that retirees run out of savings:

  • Longevity – No matter how much the retiree saved, he or she lives so many years after retiring that the savings eventually run out
  • Market risks – Increases in prices and unexpected drops in returns on investments make it so that the retirement savings do not last as long as the retiree had hoped
  • Health expenses – Medical expenses and the costs of long-term care that are not covered by Medicare erode the retiree’s savings
  • Family risks – Unforeseen circumstances require the retiree to spend a substantial portion of his or her savings for the benefit of family members; these risks include the retiree’s own divorce or bailing adult children out of a financial crisis
  • Policy risks – Changes in tax policy mean that more of your savings must go to the IRS, leaving less money to cover your expenses

The researchers found that market risks are the biggest source of worry for the retirees they interviewed.  Meanwhile, they found that longevity is the reason that most retirees who run out of retirement savings end up in that situation.

Act Now to Ensure That Your Retirement Savings Stick Around for a Long Time

One thing that all the risk factors have in common is that they are at least partially beyond your control.  You should save for retirement with the assumption that you will live for many years after you retire and that you will incur unexpected expenses.  Therefore, you should diversify your income streams; even if you have a 401K and plan to draw Social Security, you should look for additional sources of income.  Likewise, investing in long-term care insurance can protect you from many healthcare expenses beyond what Medicare will cover.

Contact David Toback With Questions About Serenely Expecting the Unexpected

A Central Florida estate planning lawyer can help you find the right estate plan that can protect you from expenses and financial setbacks that are beyond your control.  Contact David Toback in Tampa, Florida to set up a consultation.



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