Skip navigation.
Go to the Principal Financial Group(R) home page
Secure  Account Login

Select login type:


Five retirement income risks and how to help avoid them

Understanding risks you may face in retirement has never been more important.

The days of relying solely on pension plans and Social Security to meet retirement income needs are virtually in the past. Employer-provided health coverage may not be available in retirement for many. And today people are living longer — and carrying more debt — than in previous generations.

Those are all reasons why it's important to develop a personal retirement income strategy. After all, once you retire, you'll need to shift gears — from saving money to managing the income from that savings. The challenge is withdrawing enough money to cover your needs without depleting your savings.

Understand—and plan for—these five key retirement income risks

  1. Longevity. The good news is that improved healthcare may extend your life. But, it could also increase your expenses in retirement. Today, there's a 25 percent change that the husband or wife of a married couple age 65 will live to age 95.[1]
  2. Inflation. Inflation can cause your annual income needs to more than double over the course of your retirement. For instance, let's say you need $50,000 a year at retirement to live. If inflation averages 2.5% a year, you may need more than $100,000 a year 30 years from now to maintain the same standard of living.
  3. Healthcare costs. Healthcare can be one of the biggest expenses in retirement. A couple who retired at age 65 in 2012 may need $227,000 to cover healthcare expenses in retirement, according to one study by the Employee Benefit Research Institute.[2]
  4. Investment risks. Poor market performance early in your retirement can significantly impact how long your savings will last. Asset allocation — dividing your savings between different investments from various asset classes — can help you manage market risk. Other options — such as annuities — can also help create retirement income that isn't exposed to market risk.[3]
  5. Public policy. Increases in taxes, new types of taxes, evolving healthcare reform or changes in programs like Social Security, Medicare and Medicaid can have a significant impact on your income in retirement. Though shifts in public policy are out of your control, you can help yourself by creating a strategy for your personal situation.

Talk to a professional

Find out how a financial professional or advisor can help.


Annuity 2000 Mortality Table, Society of Actuaries Committee on Life Insurance Research
Savings needed for Medigap premiums, Medicare Part B and Part D premiums and out-of-pocket prescription drug expenses. Assumes median drug expenses and excludes long-term care. Employee Benefit Research Institute, “Savings Needed for Health Expenses for People Eligible for Medicare,” October 2012.
Guarantees are based upon the claims-paying ability of the issuing insurance company.

No investment strategy, such as asset allocation, can guarantee a profit or protect against loss in periods of declining value.

t140610034o - 6/2014

Have a question? Call us at 1.800.986.3343

Copyright © , Principal Financial Services, Inc.
Disclosures and Terms of Use | Products and Services Disclosures | Privacy and Security
Securities offered through Princor Financial Services Corporation, member SIPC