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Encore: Future retirees: Brace yourself for three major financial risks

My colleagues just published a review of recent research on the impact of three risks that households face at older ages.

These late-life risks include: 1) high out-of-pocket medical costs; 2) cognitive decline; and 3) widowhood. The takeaway from the research is that, so far, these risks have affected only a few households severely.

In the future, however, the adverse effects of these risks are likely to become more significant, because the age 75+ population is projected to more than double between now and 2040; the likelihood of physical and cognitive problems rises sharply after 75; health care costs will grow more rapidly than income, and the older population will increasingly rely on modest 401(k) balances that are difficult to manage.

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