|You may need to protect yourself against outliving your assets, even if you have diligently saved for your retirement. Consider the following:
Retirement plans limit contributions
Employer-sponsored plans such as a 401(k), 403(b) or Keogh are an important part of planning for retirement. However, contributions to these plans are limited.
Social security and pensions may not be enough
Your social security and pension may provide less than you need to retire. In 2002, the average Social Security check was $876 per month, according to the Social Security Administration and the value of fixed pensions is eroded by inflation.
Inflation and taxes can eat away at savings
Over time, inflation will make everything you purchase more expensive, so your investment earnings need to keep pace to maintain your current standard of living. Many sources of income may also be taxable such as Social Security, IRA payments, interest earned on CDs and savings accounts. You may end up with a lot less after-tax income that you had been expecting.