WHAT IS RISK AVERSION
Risk aversion is the tendency to avoid risk. A volatile investment can make you rich or devour your savings. A conservative investment will grow slowly and steadily over time.
FIVE COMMON RETIREMENT RISK FACTORS
What you don’t know will hurt you! We have to be honest with ourselves and make the necessary sacrifices for ourselves and family. Children should be taught at an early age the symbol of a piggy bank. We recommend looking at all the strategies available from qualified professionals to become risk averse at any age as much as possible.
- Longevity. While none of us can predict how long we’ll live, people at age 65 have a high probability of spending 20 years or more in retirement. …
- Inflation. …
- Market volatility. …
- Health care/unexpected expenses. …
- Withdrawal strategy.
The Bottom Line
The burden of retirement planning is falling on individuals now more than ever. Few employees can count on an employer-provided benefit pension, especially in the private sector. The switch to contribution plans such as 401(k)s, also means that managing the investments becomes your responsibility, not your employer’s.
One of the most challenging aspects of creating a comprehensive retirement plan is striking a balance between realistic return expectations and a desired standard of living. The best solution is to focus on creating a flexible portfolio that can be updated regularly to reflect changing market conditions and retirement objectives.
