Personal Retirement

Four Key Retirement Challenges

Four Key Retirement Challenges

Approaching retirement can be an exciting time full of potential and possibilities. Four critical questions are likely to arise during this period, which may also be relevant to those already living in retirement. 

How much replacement income do I need to pay both monthly and unanticipated bills?

It may be helpful to measure the amount you have today against your projected monthly expenses, including unexpected costs such as healthcare. This is a crucial area as uninsured healthcare costs can erode retirement savings quickly. Conducting a "gap analysis" will give you an idea of how much more you should save.


How long could my spouse and I live in retirement?

For a couple, age 65, there is a 25% to 50% probability that one or both spouses will live 30 or more years, depending on the study. Some even suggest the probability of living to age 95 is closer to 50%.4 Clearly, your retirement savings will likely need to last for many years, if not decades. However, people often do not realize how long they may live after they retire.


What happens if I begin to withdraw from my accounts when I retire and the market falls?

The impact of an extended market downturn shortly before or after retirement is twofold. First, it reduces the money available to live on. Second, because the losses are realized as investments are withdrawn for living expenses, it’s often difficult to recover even if the market makes substantial gains in the future.  A diversified portfolio may help weather a market downturn early in your retirement. The key is to have an asset allocation strategy, which includes different asset classes, in place. As you segue into retirement, you may want to reduce your exposure to stocks and increase your fixed income investments.


How much money can I safely take out of my retirement savings each month?"

The reality is that there is no simple rule of thumb for this question. The answer will be unique to you and should take into account your health, your family’s longevity, your goals during retirement, your financial needs and the legacy you plan on leaving.The best way to approach this question is to create a holistic financial strategy before you enter retirement. Each year, review your plan and update it, recognizing that it is likely to change over time.

4Revisiting the "4% Spending Rule," The Vanguard Group, Inc., 2012, page 5.

Definitions: The Bloomberg Barclays U.S. Municipal Bond Index consists of a broad selection of investment-grade general obligation and revenue bonds of maturities ranging from one year to 30 years. It is an unmanaged index representative of the tax-exempt bond market. The Bloomberg Barclays U.S. Corporate Investment Grade Index is an unmanaged index consisting of publicly issued U.S. corporate and specified foreign debentures and secured notes that are rated investment grade (Baa3/BBB or higher) by at least two ratings agencies, have at least one year to final maturity and have at least $250 million par amount outstanding. To qualify, bonds must be SEC-registered. An investor cannot invest directly in any index.

Investors should consider the investment objectives, risks, charges and expenses of Dreyfus Municipal Bond Fund carefully before investing. Call Dreyfus at 1-800-443-9794 to obtain a prospectus, or summary prospectus, if available, that contains this and other information about the fund, and read it carefully before investing.

RISKS All investments contain risk and may lose value. Bonds are subject to interest-rate, credit, liquidity, call and market risks, to varying degrees. Generally, all other factors being equal, bond prices are inversely related to interest-rate changes and rate increases can cause price declines. The amount of public information available about municipal securities is generally less than that for corporate equities or bonds. Legislative changes, state and local economic and business developments, may adversely affect the yield and/or value of municipal securities. Other factors include the general conditions of the municipal securities market, the size of the particular offering, maturity of the obligation, and the rating of the issue. Income for national municipal funds may be subject to state and local taxes. Income may be subject to state and local taxes for out-of-state residents. Some income may be subject to the federal alternative minimum tax for certain investors. Capital gains, if any, are taxable.

The retirement material contained is for general information and reference purposes only and is not intended to provide or be construed as estate planning or other professional advice.

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