If you are a retiree in your 70s or older, you may feel well positioned to weather potential financial shocks. But if you have yet to enter your golden years, you may face more difficulty maintaining your future retirement standard of living in the aftermath of financial shocks.
That is the consensus of a 2018 report from the Center for Retirement Research (CRR) at Boston College. Unveiled back in February of 2018, the report is entitled "Will the Financial Fragility of Retirees Increase?"
Its conclusion? Future retirees may not be able to rebound from financial jolts, such as those from unexpected medical expenses or the death of a spouse.
That brings up an important question. Why would tomorrow’s retirees be at a greater disadvantage than those who have already retired?
Current retirees may be benefitting from company-sponsored retirement plans in addition to their own retirement assets. Not so for future retirees who face "inadequate savings and the limited income that safe withdrawal rates provide, reducing the cushion between their incomes and fixed expenses," according to the report.
Another alarm sounded in the report: "If households choose to hold a significant portion of their savings in equities to increase the income their savings provide, they will be more exposed to sharp market downturns that arrive early in retirement."
