Never underestimate the risk to your retirement.
According to a Kiplinger report, although they may be keeping an eye on other potential threats to retirement, people often overlook three risks that can completely derail their plans.
First, there's the risk of portfolio failure.
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The report pointed out that the 4 percent rule suggests that a portfolio consisting of 60 percent bonds and 40 percent equities will provide sufficient income to allow you to withdraw 4 percent of your total portfolio every year.
However, recent reports find instead that such a strategy will fail approximately 50 percent of the time, thanks to a low-interest-rate environment and market volatility.
Another method it zeroes in on is "guessing how long you'll live and dividing your savings by 20 to 30 years." But people are living longer these days, and making the wrong guess will leave you high and dry at the worst possible time—when you're probably too old to go back to work.
And failing to have a written income plan to strategically withdraw assets from retirement accounts for the duration of retirement can also pose a significant risk, since making the wrong choices can deplete assets far more quickly and once again leave you stranded.
The second overlooked risk is that of unexpected financial responsibility.
If you're a grandparent, had you considered the possibility that you might end up taking care of a grandchild should anything happen to their parents? Conversely, are you prepared to take care of your own parents if the need arises?
If you lose a spouse, can you cope with the loss of their Social Security check or potential changes to a pension, if any?
And don't forget that if you become widowed, single tax brackets will take more of your money than married ones did—just when you probably have less money to spend on taxes.
Last, but certainly not least, is the risk of health care.
Particularly now, with all the rules in flux as potential repeal of or changes to the Affordable Care Act could affect everything from private insurance to Medicare and Medicaid, even those who are healthy enough to avoid long-term care—and thus dismiss the need to purchase a policy—could find themselves shelling out more—a lot more—for the care they do need.
And if you're not prepared for the possible need of LTC either by yourself or your spouse, you're looking at the potential for real disaster.
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