The 6 Key Risks in Retirement—and How We Help You Overcome Them

Retirement should be a time to relax, enjoy, and explore new experiences after a lifetime of work. But it’s also a phase of life that comes with unique financial risks, many of which are often overlooked. 

At NPPSS, we understand these risks and are committed to providing you with strategies that offer stability and peace of mind, so you can embrace retirement with confidence. Let’s dive into the six major risks you might face in retirement—and how our Indexed Universal Life (IUL) strategies can help you mitigate them.

1. Tax Rate Risk

Taxes can have a significant impact on your retirement savings, especially since future tax rates are unpredictable. The tax rate risk is the possibility that tax rates will rise in the future, which could reduce your retirement income. Unfortunately, changes in tax laws are beyond our control, but planning with tax-advantaged solutions can make a world of difference.

How We Help: With an IUL, your cash value grows tax-deferred, meaning you won’t pay taxes on the growth as it accumulates. Even better, you can access your money in retirement with minimal or no tax impact. This tax-free approach helps protect your wealth from potential increases in tax rates, giving you more control over your retirement income.

2. Inflation Risk

Inflation is the gradual increase in the cost of goods and services over time. As inflation rises, the purchasing power of your retirement savings diminishes, which can impact your quality of life in retirement. Many retirees worry about outliving their money or not being able to maintain their current lifestyle due to rising costs.

How We Help: An IUL offers growth potential that can help your savings keep pace with inflation. Unlike some retirement vehicles directly tied to the stock market, an IUL grows based on the performance of a market index with a floor and cap. This means that your savings can grow even as inflation rises, without being vulnerable to market volatility, ensuring you maintain your purchasing power over time.

3. Longevity Risk

One of the most common fears in retirement is the possibility of outliving your savings. With increasing life expectancies, it’s essential to plan for a retirement that could last 20, 30, or even 40 years. Longevity risk refers to the risk of depleting your retirement funds too early, leaving you financially vulnerable in your later years.

How We Help: Our IUL plans are designed to provide lifetime income options, ensuring that your retirement savings last as long as you do. This means you can have a steady stream of income for life, giving you peace of mind that you won’t outlive your resources. We work with you to establish a sustainable plan tailored to your retirement goals and longevity.

4. Market Risk

Market risk is the risk of losing money due to fluctuations in the stock market. If your retirement savings are heavily invested in the market, a downturn at the wrong time—particularly early in retirement—can severely impact your ability to sustain your savings over time. This can be especially troubling if you’re depending on these funds for your daily expenses.

How We Help: Our IUL strategy shields you from direct market exposure, meaning your savings won’t decrease due to market downturns. The cash value in an IUL grows based on a market index but includes protections that prevent losses during negative market years. With our IUL solutions, your retirement savings remain stable, even when the market is volatile, allowing you to confidently plan for the future without worrying about unexpected losses.

5. Long-Term Care Risk

As we age, healthcare costs can become a significant burden, and the potential need for long-term care is a very real concern. Long-term care costs can quickly deplete retirement savings, and traditional health insurance and Medicare often don’t cover these expenses. Long-term care risk refers to the financial impact of needing extended medical care, which can jeopardize your retirement savings.

How We Help: At NPPSS, we understand the importance of being prepared for healthcare needs in retirement. That’s why we incorporate long-term care coverage into our IUL plans, allowing you to access funds specifically for long-term care if needed. This feature ensures that if you require extended care, you can cover the costs without draining your retirement funds, preserving your savings for other essential needs.

6. Withdrawal Risk

While it may seem simple, figuring out how much money to withdraw each year in retirement can be challenging. Withdrawal risk occurs when retirees take out too much too soon, leading to financial shortfalls later on. This can happen due to underestimating expenses, living longer than anticipated, or mismanaging withdrawals.

How We Help: We guide you in setting up sustainable and tax-efficient withdrawal strategies, ensuring that your retirement income lasts throughout your retirement. With an IUL, you can access funds through policy loans, often tax-free, allowing you to structure your withdrawals in a way that protects your overall financial security. Our goal is to help you maintain a reliable income stream while preserving your savings for the years to come.

Why Choose NPPSS?

At NPPSS, we believe that planning for a successful retirement involves more than just financial growth—it requires addressing potential risks that can impact your long-term security. By incorporating IUL strategies into your retirement plan, we help you navigate these risks with confidence and security.

Our team is committed to creating personalized, strategic solutions tailored to your unique retirement goals. With our guidance, you can feel prepared to enjoy a comfortable retirement, no matter what challenges lie ahead. If you’re ready to take control of your retirement and safeguard your future, reach out to us today to learn more about how we can help.