It is no secret that there are a lot of factors that go into planning for retirement.  It is also important that each one gets addressed individually, and carefully.  Many people stress over these issues, or even do not know what they are.  It is important to be proactive in knowing these issues and how to deal with them.  Here are four of the biggest issues to consider when planning for retirement:
1) Longer Life Expectancies. The greatest social program of our time, Social Security, and was passed in the 1930s when the life expectancy for men was around 59 years and women 63. At that time, folks could only take their social security at age 65, and many would not even receive the benefit! Now, a woman is expected to live over 80 years, and there is a 25% chance a woman will live into her 90s and beyond. I had to tell a woman in my office last week that according to our projections, she will run out of money at age 82. It is a very humbling experience to have to relay this information to someone, and we will most certainly make some adjustments to her investment program and spending habits to account for this potential pitfall.
2) Modern Medicine.  Modern medicine is keeping us alive in incredible ways, thus putting more pressure on the already over taxed social security system. In the 1950s, there were 16 workers to every beneficiary, and now it is down to below 3 workers. Retirees will most certainly have to consider how social security is paid out when planning for their own retirement. I am most certainly in favor of raising the social security retirement age as soon as possible to help combat this drastic future shortfall.
3) Rising Costs of Healthcare. Ask most seniors what rising cost they are most concerned with, and almost all will say healthcare. The consumer price index (CPI) rose 29% from 1999-2008, while healthcare costs rose a whopping 119%. President Obama addressed some of these issues with the sweeping healthcare reform in 2010. But not all of them. I still feel it starts at home with many of these major healthcare issues. America is obese, and if most of us lost some weight odds are we would contract fewer debilitating diseases that would require healthcare. It is also good to know that smoking rates by the younger generation are falling
4) The Sequence of Returns.  The sequencing of returns is a major issue that is often overlooked. It is one thing to say the market has returned 8% over a 10 year period, and it’s another to look at the individual years to see how the market preformed in each year. For example, what if you retired with 1 million at the beginning of 2008 only to see your conservative investment lose 10-20% of its value due to the economic crisis. You may not have had the stomach to hang in there and wait for the market to come back, which it certainly did from 2009-2012. The problem with retirement planning is the unpredictability of the investment return in the short run, and every individual should work closely with his/her advisor to plan for these potential pitfalls
Listen below as Win Damon and I chat up this topic on WNBP FM Radio 1061 in Newburyport and streaming at WNBP.com.

With more than 25 years of experience as a credentialed tax professional, Stu Steinberg brings a broad depth of knowledge to his work. Stu founded Erock Tax to help provide tax strategies to individuals, families and small businesses. He also uses his CPA expertise in many areas of personal finance.  Stu is passionate about empowering his clients through education about their tax health. He is highly energetic and brings a sense of optimism, creative problem-solving and a deep level of commitment to every Erock client.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investment(s) may be appropriate for you, consult your financial advisor prior to investing. There is no guarantee that a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk. Stock investing involves risk including loss of principal.