Do you remember the scene in the blockbuster movie Jurassic Park when the intrepid hunter took to the woods to hunt down a pair of escaped raptors? He was so busy focusing on the hungry dinosaur he could see right in front of him that he completely missed the danger coming from the side. It was a bad ending for the intrepid hunter.

We thought of that scene as we read this article just published on the Time Magazine website. Written by nationally known retirement guru Walter Updegrave, the article which appeared last week lists what he calls “three unexpected risks to prepare for in retirement.” In Updegrave’s words, “When it comes to retirement planning, we naturally focus on the risks we’re most aware of – for instance, the possibility that this nine-year-old bull market could give way to a ravaging bear. Or that an unscrupulous or incompetent adviser might talk us into bad investments.”  However, he adds, some things that might not be on your mind can still rob you of your retirement security if you’re not vigilant.

Before we list Updegrave’s three retirement risks that are easy to overlook, let us add a fourth big risk, one that this article (devoted like so many others solely to money) fails to mention: the risk of focusing all your so-called retirement planning efforts on your finances. Having a sound financial plan is vital in retirement, no doubt about that, but as we’ll discuss below, it’s definitely NOT the only facet of a true retirement plan that you’ll need!

But for now let’s get back to the Time article, to see what Walter Updegrave calls “unexpected risks.” Once again, bear in mind that all three of these have to do primarily with money – saving enough and making it last.

The first big risk that retirees often ignore is complacency.  Too often, says Updegrave, people get into a modest savings habit early in their careers and never stop to reexamine their true situation, thus allowing their 401(k) or other retirement savings accounts to languish. “You’ve let yourself be lulled into a false sense of security that you’re on the road to a secure retirement – or at least making reasonable progress toward that goal – while in reality you may be well short of where you need to be,” Updegrave warns. Sometimes a healthy stock market like the one we’ve been enjoying recently adds to this complacency risk by reinforcing that warm, fuzzy feeling that everything is going to turn out fine.  What’s the prescription? “The best way to protect against this risk is to periodically give yourself a retirement checkup,” he writes, using a retirement income calculator or other tool such as a financial dashboard.  Spending time in honest appraisal, guided by a trusted financial adviser, will help restore your “situational awareness” and get you get back on track toward your goal.

The second big risk that retirees often overlook, says Updegrave, is relying too much on emotion. In the author’s mind, this risk often involves over-reacting to the fluctuations in the stock market and the dangers of reallocating investments based on the mood of the moment. “Whether it’s getting overly excited when stocks are on a tear or too pessimistic when the market is taking a beating, letting your emotions sway your investing strategy can inflict real damage on your retirement prospects,” Updegrave says. Instead, make an allocation plan, preferably a written one, “that will increase your chances of being able to ride out stocks’ ups and downs without reacting rashly to them.”  He advocates the use of tools like Vanguard’s risk tolerance questionnaire (found here) to help you determine the asset mix that’s right for you. Then keep your emotions in check and stick with the plan unless there’s a good reason not to.

The third risk factor often ignored is that people underestimate their longevity.  The issue here, says Updegrave, is not simply about not spending down your nest egg too rapidly once you’re retired. Indeed, he states, “longevity risk can also come into play during your working years” because people may tend to underestimate their life span and as a result set aside too little while they’re still working. In other words, if you assume a retirement life that is 15, 20 or 25 years too short, “you’re not going to accumulate nearly enough savings to maintain your pre-retirement standard of living throughout your post-career life.”  Updegrave suggests using one online tool called the Actuaries Longevity Illustrator to help you get a good estimate of your projected life span. “With these estimates in hand, you will be able to better assess how much you ought to be saving during your career and how much you can safely afford to spend once you’re retired. Of course,” he adds, “you won’t entirely eliminate longevity risk. But you’ll be much better equipped to deal with it.”

Once again, there’s nothing particularly wrong with Updegrave’s suggestions as far as they go. But the problem, as we stated above, is that they don’t go far enough. Over and over, retirees and those planning for retirement tell us the things that worry them most in their aging years are running out of money, becoming a burden to their loved ones, and being forced against their will into a nursing home. You can have plenty of money and follow the Time article’s advice, but one health crisis can knock the underpinnings out of your financial plan and leave you broke and desperate.

Why not do the truly prudent thing and take the time to work on a plan for your retirement that avoids such a bleak scenario? Our approach is called a LifePlan, and only AgingOptions has it – a plan that blends finances together with legal, housing, and medical plans all together into one seamless strategy. We even help you plan how to make your loved ones part of your LifePlan because aging, as we like to say, is a family affair. Please accept our invitation to find out more by joining Rajiv Nagaich at a free, no-obligation LifePlanning Seminar soon. We offer these at locations throughout the Puget Sound region, and you’ll find details plus convenient online registration here.

Our goal is to make sure you’re well-prepared for all the risks you’ll face in retirement – even the ones that can sneak up on you from deep in the woods. Age on!

(originally reported at www.time.com)

Image credit: 401kcalculator.org