Risk is a constant part of people’s lives. life after retirement It is a period that can last up to 1/3 of your life or more. And it can face threats that make life after retirement unhappy and not as planned. In total, there are 7 risks to be aware of and prepare for.
1. The risk of longevity (Longevity Risk) is the most important risk, known as the Risk Multiplier, which causes other risks. There is also a higher risk For example, to show the picture, if at all, can only live 1-2 years after retirement. and even if the stock market is down for how long Or the inflation rate will rise to 2 digits, it will not affect life because of its short life. Conversely, longevity will have a big impact.
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2. Inflation Risk
this means that every time you plan for retirement you have to take into account the issue of “Effects of inflation” every time.
3. Additional Withdrawal Risk or run out of money before death In foreign countries, there is a term called Safe Withdrawal Rate, which means Safe withdrawal rates that allow money to earn as long as you want. It is a serious study in the United States.
Which has experimented with using data dating back to 1926 to find the maximum initial withdrawal rate (SAFEMAX) that will allow funds to generate income for at least 30 years, which can be called 4% is the initial withdrawal rate (Initial Withdrawal Rate) Safe (Safe Withdrawal Rate) (an article published in a financial journal during the year 1994 by financial planner William Bengen)
This leads to the question that So what should the safe withdrawal rate be? Leads to a body of information and research on how to raise money. (Accumulation Approach), which has become one of the key factors that will allow you to have money in retirement for as long as you want.
4. Risk of Health Expenses When reaching the elderly age after retirement, the body will easily get illness. is followed by medical costs that no one can say how much illness or how long it will take But from statistics, it was found that the rate of increase in medical costs It is also called the inflation rate of medical costs in Thailand is so high with 8 – 9%, which means that medical costs will double every 8 – 9 years (Rule 72) without taking into account. Medical advances that make treatment more effective But it has to be exchanged with higher expenses.
5. Long Term Care Risk It is a risk that can happen at the end of life. Because the illness is so serious that he cannot support himself and may even have to lie in bed. Of course, it would come with huge expenses. It is a burden on the family. This risk is often discussed in the United States. Because statistics show that people aged 65 have a chance of falling into this condition as high as 70%, but in Thailand, it is not much talked about. who believes that if you ask people around you You will get the answer that at least 1 person in the family has an elderly person who cannot help himself.
6. Reduced Risk of Cognitive Abilities and Financial Risk of Elder Abuse Research in the United States has shown that with increasing age, knowledge will be significantly reduced. especially the ability to think, analyze, discriminate
physical and mental deterioration on retirement Not only this, there is another risk that often happens to the elderly, namely financial scams. Which can be seen in the news from time to time, so being an elderly person with money (a lump sum) is a risk that can be cheated. is the target group of 18 crowns, both from outside Not even family members
7. Risk of investing in the money market (Market Risk) and the risk of the sequence of returns (Sequence of Returns Risk). amid economic volatility that Thailand has not taken the matter seriously Many retirees do not feel how volatile or uncertain it is. which may have to come called methods or tools Monte Carlo simulation used in the process of financial planning or larger retirement planning in Thailand
Source: Stock Exchange of Thailand
