The 5 Keys to a Risk Free Retirement

The Magic of Retirement


Magic is not MAGIC once it is explained. 

The magic of retirement is not magic at all. Retirement is what YOU make of it. Retirement is unique to you and your spouse and any one who is financially dependent upon you. No two people envision retirement the same way and retirement is never the same for any other person.

Retirement starts when you want it to and does not have to end because you find a way to earn additional money. Retirement does end however, if you run out of money. 

Retirement is best defined as financial independence. The freedom that allows you to live the way you did while you were earning a living. 

Most successful retirees find that financial independence gives them the opportunity to enjoy their family and their friends. To follow their beliefs; it provides the time to help with their favorite charities; to travel; to pursue higher education; to exercise & follow good health of an active lifestyle. Retirement for many is living in “The sweet spot of life.”

Retirement is built on the wealth you created during your working years. Balancing your money & capital assets against your lifestyle needs can be extremely difficult and must be carried out throughout retirement time. This is a difficult, daunting & an on-going task. Difficult & daunting due to the 5 major risks that retirees face. These risks, if mastered or mitigated (to a low probability of occurrence) can yield a successful retirement.


5 Key Risks Retirees Face 

The biggest question retirees face during retirement is “Will my income last?” Almost universally there is no greater fear during retirement than - having too much life at the end of my money!  Thus is the greatest challenge to financial independence is creating a retirement you can live with and an income you will not out live. A very complex challenge! 

As retirement nears, our thoughts about retirement shift away from the accumulation of retirement dollars & towards the distribution & de-accumulation of retirement dollars.  Several things will interfere with our efforts to achieve a successful retirement. These things will include, but are not limited to: soaring medical costs; a longer life expectancy (more years requiring more money); retirement responsibility (the responsibility for retirement security is shifting away from employer provided plans, into the hands of employees; to us, the individual). Many large employers have reduced, changed, or eliminated the, once sought after, company pension plan. This forces the individuals to act as their own pension managers. Additional factors like inflation & the potential consequences of unwise & ill-informed decisions will further affect your ability to finance your retirement, and on and on. These things could mean the difference between enjoying financial freedom during retirement & not having enough money to support you over your life time.

 As we transition from pre-retirement to retirement drawing down our life savings will require new tactics to combat the things that will interfere with financial freedom (aka. retirement). First of all is the understanding that, along with personal discipline, motivation & individual responsibility, the above things can be whittled down to 5 key risks which stand in the way of creating secure lifetime incomes (aka. financial freedom).

A consumer research report conducted by Farrell Dolan, CFP & Van Harlow, CFA  of Fidelity Retirement Income Services and Fidelity Management & Research Company detailed the scope of America’s retirement income challenge and identified 5 key risks that must be managed in order to secure lifetime incomes.

These 5 key risks are:

1. Longevity Risk;
2. Inflation Risk;
3. Asset Allocation Risk;
4. Excess Withdrawal Risk;
5. Health Care Expense Risk.

By identifying these key risks, Dollan & Harlow gave us a scientific approach to reducing the greatest fear we have in retirement – outliving our retirement income!

By reducing and mitigating these 5 Key Risks we increase the probability that our retirement will last longer than we do.

For a copy of the Fidelity White Paper “ Retirement Income Planning – America’s  Lifetime Income Challenge” covering the work of Farrell Dolan & Van Harlow please call me at 562-598-3450.


GBJ Scott Financial is here assisting you in your quest of True Wealth: Create. Grow. Preserve.