Several people want to have a long and secure retirement and have saved and invested throughout time to achieve this goal. However, in today’s environment, there are hazards that could jeopardize those retirement funds and reduce the expected returns.
Low interest rates
Over the years, the trend of retirement interest are decreasing. One way to go above this is to put money on other financial tools like investments to boost your earning for your retirement.
Investing in the stock market has proven to be profitable over time. Indeed, depending on the market and historical period, average yearly returns of various equity markets and indexes have ranged from 8% to 10% over the last few decades.
Withdrawal timing and sequence of returns risk
Considering market volatility, some portfolios may be large and diverse enough to generate significant annual earnings. However, as previously indicated, retirees may need to access underlying principle to cover living expenses, such as when stock portfolio returns are hampered by a market downturn.
Government policy uncertainty: Inflation, Social Security, Taxes
Government policies may change overtime that is why you need to protect yourself from sudden rise of inflation, changes in the tax system to be prepared for your retirement.
Longevity and outliving your assets
Life expectancy of people, even in the Philippines, is now longer than in the past decades. You might outline your assets during your retirement that is why it’s important to assume that you might live longer during retirement planning.
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