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Overcoming 5 big worries

By Judy Martel · Bankrate.com
Tuesday, May 24, 2011
Posted: 4 pm ET

Being wealthy doesn't guarantee a worry-free retirement. In May, InvestmentNews surveyed 542 advisers to ask what they believe to be the biggest obstacles to a successful retirement plan. Chances are, they're the same as everyone else's concerns, but for those who have saved and invested, these five challenges can be overcome or managed with a little planning and diligence.

The worry that tops the list, cited by 28.6 percent of respondents, is longevity -- simply that you'll outlive your money. It's a valid concern once you've stopped working, and as of yet, no one is able to accurately estimate an individual life span. That's why companies offer annuities that provide a steady stream of income for life and why it's important to project financial planning out for the long term, whether you use annuities or tap into your investment income. Bankrate's retirement income calculator can help.

The second concern is lack of assets, listed by 27.3 percent of advisers. Only you can determine how much you need to feel comfortable during your golden years, but it's a matter of calculating the number of years you plan to be retired along with the amount you want to spend. A new boat may not be as easy to justify as it is when you're working, so use this retirement goal calculator to give you an idea of how much you need.

Inflation is the third most pressing concern of advisers (18.8 percent). There's nothing you can do to control inflation, but you can plan for it. Depending on your time horizon for needing retirement income, remember that for longer-term investments, inflation is a greater risk. For the shorter term, volatility of returns is. Having a mix of long and short-term investments and adjusting the ratio as you reach retirement age is the best way to manage both inflation and volatility. If you reduce your exposure to short-term volatility too much, you'll be fully exposed to inflation risk, and won't have the earning power to make up the losses to your investments.

The final two concerns go together and are, again, related to health. Health care expenses were cited by 13 percent of respondents as a major worry, followed by long-term care costs. You can try to manage health care costs with a healthful lifestyle, but sooner or later, most people get sick. Long-term care insurance is one answer, but there are estate-planning alternatives, like life insurance.

What retirement worries keep you awake at night?

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