Friday, July 23, 2010

Retirement Risk

Some says Risk is Opportunity, true only if one knows what the risks are and how they might be managed.

What are the TWO (2) biggest "Retirement Risk"?

1. Inflation

No doubt. Inflation is a big risk for would-be retiree and current retirees.
Official inflation rate might be 2%~3% but the actual inflation rate can goes up to double digit as health care expenses in going up up up while one's health status might going down down down.

How to manage?
- To ensure rate of return is good and most important, don't lose money in investment and get-rich-quick-scam.
- Earn as much as possible, save as much as possible, investment return as good as possible.
- Pool of risk (medical insurance)
- Eating right, exercising on a regular basis and using preventive care.


2. Outliving one's assets

How come longevity is a risk?
Most people (don't have enough saving) will run out of money first, before they run out of life.
No money (or with too little saving), how to survive with comfortable lifestyle? How to survive with dignity?

How to manage?
- To ensure rate of return is good and most important, don't lose money in investment and get-rich-quick-scam.
- Earn as much as possible, save as much as possible, investment return as good as possible.
- Create passive income
- Doing something you enjoy to keep mentally active and earning income to supplement your retirement fund.
- Keep hobby a low cost hobby.