Like most approaching retirement, you are probably wondering if you are financially ready. You may have a pension. You plan on collecting social security. You may have put money into your employer's 401k plan. You and your spouse may each have an IRA and some money in the bank. You may have some life insurance or an annuity or a long-term care policy. Does that mean you can retire when you want? The answer is: it depends.

Lots of things can happen during 20 to 40 years of retired life. Here are a few things that may cause you to ask questions.

• It is projected that the Social Security trust fund will be able to pay full benefits until 2035. How will it affect you if the funds run out? A retirement plan should answer that question.

• Is your pension safe? Company and public employee pensions are underfunded. What happens if your company, city, or state goes bankrupt? It could happen.

• How long will your retirement savings last? What if your investments do not continue growing at the same rate as in the past?

• How risky are the investments in your portfolio? Many believe all they need to do is put their money in a low-cost index fund. The index lost nearly 50 percent in 2009 and 34 percent in March 2020. Investing in stock index funds just because they are "cheap" may be taking on more risk than you realize.

• If you or your spouse go into a nursing home, how much will it cost? Long-term care insurance may pay for it, but that coverage is not free. For some people buying a policy makes sense, while for others, it might not. A financial plan can help answer whether a long-term care policy is right for you.

• What happens if inflation comes roaring back? Inflation while living on a fixed income during retirement is a bigger threat than inflation while working.

• How does living too long or dying too soon affect your retirement plan? Critical decisions are often made during the retirement process without enough consideration of how long you will live. While a plan cannot answer how long you will live, it can project how it will be altered if you live longer or shorter than you think.

In the past, retirement planning was a static process. Taking information supplied by clients, planners provided charts and graphs to show their financial condition for decades in the future. The technology limited what you could do.

New computer programs allow Financial Planners to run thousands of tests to analyze different scenarios. The new planning process also allows people to check, update, and re-review their plans as time passes and conditions change. These programs enable scenarios to be run in real-time. They can be generated for a modest cost by Certified Financial Plannersâ„¢ (CFP®s) who specialize in retirement planning. 

Korving & Company

Arie Korving CFP® and Stephen Korving CFP®

Investment Management | Financial Planning

1510 Breezeport Way, Suite 800
757-638-5490
info@korvingco.com

www.korvingco.com