In the last several years, we’ve heard a great deal about Americans living longer and how that affects our country’s health care system. But perhaps not as thoroughly discussed is how our lengthening life spans impact our income and money management during retirement.
In addition to longer life spans, a few additional trends that can impact investment strategy, causing some investors to outlive retirement assets, include low interest rates and rising health care costs. The low-interest rates we’ve seen over the last several years have made it difficult for investors to achieve returns above their draw down rate. And the cost of health care for retirees has continued to rise well above the rate of inflation.
We should all be thrilled with the thought of living longer, but we should also be realistic about what that means for our finances. Our investment portfolios must be properly structured so we have the assets to cover our needs. A careful balancing act, we can’t be too conservative or too aggressive, as either strategy may adversely affect our ability to achieve the lifestyle we desire for our retirement years.
Retirement portfolios have traditionally been approached more conservatively, with the focus being more on capital preservation and safe income versus growth. But it may be time for some individuals to rethink that approach and consider retirement investing.
My colleagues in PNC Wealth Management offer the following considerations:
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