When it comes to your retirement, you’re the only one who’s ultimately going to be looking out for your best interests. While a financial advisor can help you through the steps of making sure that your retirement funds are properly secured, it’s up to you to make sure that you have enough money set aside to help you in your later years. That means understanding the most common threats that put retirement funds at risk. Keep these in mind before you sit down and define with your retirement goals.

Medical Risks

It’s impossible to know what potential medical problems you’ll be dealing with ten or twenty years down the line, and that makes it hard to define ballpark estimates for how much you need to safe. But it’s critical that you keep a few things in mind. If you’re retiring early, it’s crucial that you set some money aside for the window between when you retire and when you’re eligible for Medicare. You’ll also want to carefully evaluate your Medicare options so that you have a plan that appropriately covers the potential needs of you and your spouse. Regardless of your circumstances, you’ll want to put aside an emergency fund in the case of a medical emergency. It’s advised that this emergency fund equal at least two years of retirement income.

Putting Too Much Stock in Investments with Low Returns

Placing your money in guaranteed investments averaging a return of 2% – 3% may be the conservative route to take, but it also leaves you less to work with in retirement. While you shouldn’t be investing entirely in higher risk/higher return options isn’t sensible, spreading out your portfolio more evenly is generally a sensible approach. Generally, you’ll want to split your assets into three categories: funds you’ll need in the next two years, funds you’ll need in the next six years, and funds you’ll need long into the future. Shorter terms funds should be focused on low risk or no risk investments, while longer-term funds should place an emphasis on investments with growth potential.

Not Accounting for Inflation

It’s easy to look at the money you have now and not taking into consideration the fact that the value of wealth depreciates. Inflation is an issue to take seriously, especially considering your retirement fund is supposed to fund you for decades into the future. Many financial professionals suggest following the 4% rule. According to this philosophy, you should only be planning to withdraw 4% of your savings each year. Naturally, this can’t account for emergency expenses, but by planning ahead, this policy should allow you to weather any unnecessary costs and also keep you protected from dramatic market decreases.