This week’s theme on the Retirement Quick Tips Podcast is: the single biggest threat to your retirement

Today, I’m talking about a recent study that highlights the disconnect between what most people think is their biggest threat in retirement vs. their actual biggest threat. 

A 2022 study from the Center for Retirement Research at Boston College found that the three main sources of objective risk, from highest to lowest, are longevity, health, and market risk, In contrast, the subjective rankings show that market risk tops the list, which reflects retirees’ exaggerated assessments of market volatility. Perceived longevity risk and health risk rank lower, because retirees are pessimistic about their survival probabilities and often underestimate their health costs in late life. 

Source: https://crr.bc.edu/wp-content/uploads/2022/06/IB_22-10.pdf

In short, retirees are focusing on the wrong risks and not giving enough weight to longevity risk, which is the risk of living longer than expected and exhausting one’s resources.

“This may distort the decisions people make, including the age at which they decide to retire, and how they decide to spend and invest their money once they are in retirement, according to Wenliang Hou, who authored the research.”

Source: https://www.cnbc.com/2022/08/05/retirees-may-be-focusing-on-wrong-risks-to-their-financial-security.html#:~:text=Instead%2C%20longevity%20%E2%80%94%20the%20prospect%20retirees,and%20perceived%20risks%20for%20retirees

That’s it for today. Thanks for listening! My name is Ashley Micciche and this is the Retirement Quick Tips podcast.    

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Tags: retirement, investing, money, finance, financial planning, retirement planning, saving money, personal finance