The Certainty of Uncertainty

December 28, 2011

In the past, one thing most working Americans could rely on was an affluent retirement. You worked hard all your life, saved prudently, and as a reward – with the help of your employer and the government – you and your spouse received a healthy income for the rest of your lives. Unfortunately, in the 21st century most Americans cannot rely on those certainties – retiring in this century means the only thing you can be certain of is uncertainty.

For example, take your health. Will you stay healthy in the future or have to deal with an injury or illness? You can hope for the best but should plan for the alternative. No one knows what kind of health they will have during their retirement. And just because you are entitled to Medicare, it doesn’t mean you won’t end up paying out of pocket for care and medications. On top of that, Medicare as we know it today may be very different in years to come. The key to health care in retirement is being able to afford medical coverage and remain physically independent as long as possible.  Whatever happens, you need to plan for health care uncertainties. That could be with extra insurance, it might be through extra savings or just by signing up to the right program.  Whatever it is, you need to be ready. 

Taxes are another uncertainty. Current talk of deficits and the national debt, in the midst of shifting political winds, means that taxes will likely change over the coming years. Your being in retirement is no guarantee that you will be immune to this uncertainty.

Depending on how much of your retirement income you take out and when, you may still face substantial tax bills through your retirement. Also, if your retirement income is large enough, you can be taxed on social security income. So just because you stop working, it doesn’t mean you stop being affected by tax hikes and cuts.  You should include tax uncertainties on your list of retirement considerations or you might have some nasty surprises during tax time in your retirement years.

We’ve just been through one of the worst recessions in our country’s history. It was a recession few of us could have predicted and one that made many people reassess what they can rely on in terms of investment and growth. We don’t know what the stock market is going to do over the next 5, 30 or even 50 years – but, whatever the market does, you need to be certain that your retirement income can sustain your lifestyle. 

That means diversifying your investments and having a long-term plan. By planning ahead you can be prepared for either a bull or a bear market. And, you can protect your assets against uncertainty. 

Be ready for the future
The problem is, too many people are putting off their retirement plans until tomorrow. And, no one has a crystal ball. To protect yourself from the uncertainties that may face all of us in retirement, you should plan sooner rather than later.

When asked about financial priorities in today’s changing environment, people are almost seven times as likely to say their core goal is “achieving financial peace of mind” versus “accumulating as much wealth as possible.” And that’s obvious, because the confidence that comes with knowing that you are prepared for the uncertainties of the future is, as the commercial says, priceless.

 Wealth Enhancement Group