German American Bancorp
09/17/2024 | Press release | Archived content
Surprises Are Great, Except When They Impact Your Retirement
September 17, 2024
Benjamin Franklin once said, "An ounce of prevention is worth a pound of cure." There is no more appropriate mission statement when it comes to retirement and the potential surprises that might arise during this important life stage. Proactive prevention establishes financial awareness that will help mitigate these surprises and create retirement longevity for your investment portfolio.
1. Surprise #1 Retiring too soon.
Many individuals set a self-defined retirement date without seeking advice or professional counsel. This may seem like an easy surprise to avoid, but there is often a lack of proper awareness of medical benefits, insurance needs, or financial projections.
Solution: Be opened minded about defining a retirement age and further seek a financial professional or team with proper expertise that can develop a plan for your success. Social Security benefits, Medicare, and individual or employer sponsored retirement accounts all have age triggering events that can & will significantly impact your financial future. For further direction, seek counsel from a CERTIFIED FINANCIAL PLANNER®.
2.Surprise #2 First year retirement spending is out of control.
This is common for many retirees early in retirement. Increased travel, out of pocket medical expenses, and simply adjusting to a new lifestyle create opportunities to spend more initially than what you may have budgeted.
Solution: It is certainly easier said than done, but budgeting without discipline is like a waffle without syrup! Our Team of Advisors encourages pre-retirement planning for an adjustment period to help offset this sudden spike in expenses. In addition to an emergency fund, preparing to have an adequate level of cash accessible to help prevent the early depletion of your portfolio assets is an appropriate goal to have.
3.Surprise #3 Forgetting or underestimating inflation.
A more complex retirement surprise to consider is the impact of inflation. Many individuals have an increased level in risk aversion as they near retirement. Hence, one can become too conservative in their asset allocation relative to their situation and simply not be able to meet the increase in living expenses later in life.
Solution: With the assistance of a financial professional or team develop a long-term portfolio approach that factors in an appropriate amount of inflation. Not only should this be a consideration for portfolio construction, but many individuals fail to plan for the cumulative impact of inflation on expenses in the retirement stage.
You have the power to own your financial freedom! Plan today with a German American Wealth Advisory Group Advisor and begin to develop an "ounce of prevention" against these common surprises.
Written by Logan Baumann, Wealth Advisor, AWMA™, APMA™,CRPS™