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Speaking of retirement plans, of course, there is no one who wants to deal with financial problems in retirement and start to question themselves about how much money would be enough or what investment yields the best. However, many people forget one question to ask themselves which is what risks in the future might disrupt our savings for retirement.
According to the study of Morgan Stanley Wealth Management, the average health expense of the elderly around the world is 2 times higher than other people because the elderly have a high cost in medical expenses and an increase in inflation rate.
In addition, the expenses in this part tend to rise continuously. The expenses in the first phase are high from traveling and relaxing and will drop in the middle phase and will high again in the third phase from the medical expenses. This is the reason why we need to reserve more money for expenses in the retirement age.
Planning retirement financial plans carefully is very important, including a plan to live until what age and what investment should we invest to get good returns. These have to be done at an early stage together with planning for a savings plan. However, most people who are successful in savings fail in retirement financial planning because they forget to manage important risks that can affect their way of life.
“Risk” is a matter that can happen all the time whether it’s in an accident or health, both are matters that cost money. What are the risks that can happen in our retired age?, follow ACU PAY to find out!
Imagine that you are short-lived such as you live for a few years after retirement or the inflation rate will rise to two digits, that’s ok and does not affect your life much.
On the other hand, in our present time, there is advanced medical technology that will make humans live longer than before. It can be seen from 30 years ago when the average age of Thais was 71.22 years old. Nevertheless, the average life expectancy of Thais has increased to 77.74 years old.
If you are long-lived, there will be a lot of effects on your way of living, including health problems and expenses. If you do not plan your financial plan well, the savings for retirement may not be enough in the future.
2. Inflation Risk
The risk that many people overlook is inflation. 20 years ago, if you had 40 baht, you could order for almost 2 menus from a food-made-to-order shop, around 25 baht per menu. Right now, with the same amount of money, you can only order for 1 menu.
Planning a retirement financial plan without considering inflation is not good. Thus, everytime you plan a retirement plan, consider the effects from inflation as well.
3.Health Expense Risk
Even though you have not retired yet, you must have dealt with illness more or less, right? The thing that follows illness or injury is medical expenses.
According to statistics, the rate of increase in medical expenses, also known as the inflation rate of medical expenses in Thailand, is 8-9%, which means medical expenses will double every 8-9 years (according to rule 72) without considering medical advances that make the treatment more effective, but at a higher cost in exchange.
4.Long-Term Care Risk
Another potential risk in the final stages of life is serious illness such as stroke, paralysis till you can’t help yourself, and bedridden. Of course there are a lot of expenses and you will be a burden to your family to take care of you. According to statistics in the United States, people aged 65 years old are 70% more likely to be in this condition.
5. Investment Risk
As we all know that investment is risky whether investing in Equity instruments, mutual funds, or gold which will be volatile in the future. Therefore, good investment should diversify the risks to generate returns as you are expected in the long run through the post-retirement period.
6.Excess Withdrawal Risk
With excessive withdrawal of funds, savings for retirement may be run out early or run out of savings before life is over. This is the most concerning risk. On the other hand, if withdrawal is too small, there will be insufficient spending to satisfy post-retirement happiness.
7.Declining Cognitive Abilities Risk and Financial Elder Abuse Risk
As age increases, knowledge, memory, and abilities decrease. Especially the ability to think, analyze, and distinguish financial scams that are often seen in the news. This is another risk faced by many elderly people. Therefore, being an elderly person with a certain amount of money may be the target of a scammer and easily enticed by outsiders or even family members.
All of these are retirement risks that, without good planning and not being aware of, could disrupt our financial plans.
