retirement

Retirement risks

The best-laid retirement plans can fall short unless you manage your risks. While some risks can be unexpected, most retirement hazards are predictable and can be easily managed if you know what to expect. Here's how to protect your nest egg against some of the biggest retirement risks.

People are living longer and healthier lives. That's great news unless you outlive your retirement savings. The average life expectancy is 78 years old in the United States. Statistics show that if you make it to age 65, you're likely to live until 81 or 83 years old.

Most people underestimate the amount of time they're going to live and invest for a much shorter period of time. To get a better idea of how much money you will need in retirement, Bankrate.com provides a life expectancy calculator that analyzes your current state-of-health based upon age, weight, height, family history and other key questions to determine your average life expectancy.

You can couple the results with our retirement savings calculator to determine how much money you need to save.

This is a fail-safe way to help you understand where you're current savings requirements are and where they realistically need to be.

To quote former baseball player Sam Ewing, "Inflation is when you pay $15 for the $10 haircut you used to get for $5 when you had hair." It can be very surprising to see how fast inflation can erode your purchasing power on everything from food to housing to health care. Even with inflation at only 3 percent a year, you would lose half your purchasing power over two decades.

Although inflation is inevitable, investing in inflation-protected securities or other investments that will gain in value as overall prices climb can help stave off rising prices.

Financial decisions are difficult enough to make without properly educating yourself -- even at a young age. Imagine yourself in 20 to 30 years when your mind may not be as spry. A 2009 study by MetLife's Mature Market Institute estimates that seniors lose approximately $2.6 billion per year due to financial abuse -- fraud as well as theft by family members and acquaintances.

Whether you're handling your retirement accounts alone or paying financial professionals for their expertise – make sure you know where the money is going, and what incentives work for or against you.

Fraud can happen no matter your age or mental state. It's wise to continually educate yourself in order not to fall prey to a fraudster.

There are more retirement risks you need to know about to protect yourself ... to learn what they are, visit the retirement page on Bankrate.com. I'm Doug Whiteman.

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