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As a retiree, you face three primary risks: inflation, health care expenses, and longevity. But you can take practical steps to minimize these risks.
Over time, the prices of goods and services rise and inflation erodes the purchasing power of your income. What can you do about inflation?
Health care expenses tend to rise faster than the general rate of inflation. As a modern retiree, you are more likely to age and live longer than any generation in the past, so medical expenses likely will become a larger percentage of your budget, especially in the later years of life. What can you do about health care expenses?
Longevity risk is the possibility that you will outlive your savings. One-half of the population will pass away before age 78—the current average life expectancy—but one-half of the population will live beyond that age, too. What can you do about longevity risk? Depending on your situation as you prepare for retirement, consider the following: