Throughout our lives, we constantly face financial risks and challenges. Retirement, unfortunately, does not cut us any slack.

The single-largest change impacting our “golden years” is the evolving replacement of defined-benefit pensions with defined-contribution 401(k) and other similar employer tax-deferred savings plans.

This is not all bad. Such a change favors folks who work for a number of companies in a variety of jobs over a career — the new norm for more and more workers.

But the net impact is to replace a retiree’s guaranteed lifetime income stream by a sum of money which, if not invested wisely, can easily lose spending power or even disappear.

The following summarizes some of the more-serious financial risks facing retirees, many of which are intensified by the above:

Longevity Risk — Life expectancy continues to increase. Depending on gender, a 65-year-old retiree can expect to live another 15-20 years. For a 65-year-old couple, odds are 50-50 that one of the two will live to age 93.

What is so bad about living and enjoying our retirement longer? The risk, quite simply, is outliving our money.

Running out of money is the single-largest worry expressed to me by retirees.

Some of the remedies can include a combination of deferring the start of full retirement, deferring the start of Social Security benefits (starting at age 70 vs. age 62 can result in a 75 percent higher benefit), investing in retirement and other savings wisely and in a disciplined manner, and considering the purchase of an immediate fixed annuity to transform a portion of savings into a guaranteed lifetime stream of income.

Inflation Risk — Consider a 20-40 year retirement with annual inflation of 3 percent. In 20 years, $100 will purchase only $55 of goods in today’s dollars and in 40 years, $31. Higher inflation rates, which are likely over this timeframe, only make matters worse.

Fortunately, Social Security benefits are indexed for inflation. Most pensions and annuities are not.

The most straight-forward remedy is to ensure that a portion of one’s savings is invested in a diversified mix of the world’s capital markets — domestic and foreign stocks, micro-cap to large cap. A diversified mix of stocks, over time, with dividends, has outperformed bond and cash investments, and there is no reason to believe this will change in the future.

Holding stocks is one of the few ways to keep one’s investment assets ahead of inflation. For folks entering retirement, I generally recommend a stock fraction of about 50 percent, +/-10 percent, depending on one’s goals and risk tolerance. Over the following 10-20 years, reducing stock exposure to about 30 percent is considered reasonable.

Long-Term Care Risk — Increases in longevity coupled with an explosive increase in long-term care costs have created a perfect storm — but not so perfect if you are paying for it! The issue here is custodial care, not medical care related to recovery or rehabilitation. It may be care offered at home or institutional care in an assisted living or nursing-home facility.

Local long-term care costs range from $20/hour for home care provided by an aide all the way to $350/day ($125,000-$130,000 annually) for nursing home care.

Recent legislation has made it more difficult to transfer assets to family members in order to qualify for Medicaid assistance. Some attorneys offer approaches involving promissory notes to protect a portion of one’s assets prior to qualifying for Medicaid.

The most effective and straightforward way to protect one’s family — in terms of care choices and asset protection — is to purchase long-term care insurance. We are fortunate in New York state to have a range of so-called partnership policies available, which offer full or partial asset protection. Also available are new hybrid life/long-term-care policies, which appeal to many people.

A watch out: don’t procrastinate. Waiting to purchase insurance drives up annual premiums and increases the probability of a medical declination of coverage. I have had clients even in their 40s and 50s declined for medical reasons.

“Going-it-Alone” Risk — This is perhaps the biggest risk. You only have one chance to get it right. Don’t mess it up.

Partnering with a trusted financial adviser is critical — one who is capable of helping you with your entire financial picture, not just the investment piece. Such an adviser can help integrate the risks outlined above with others to give you the best shot at financial peace-of-mind while you enjoy a fruitful and well-deserved retirement.

James Terwilliger, CFP®, is vice president of the financial planning, wealth strategies group at Canandaigua National Bank & Trust Company. He can be reached at (585) 419-0670 ext. 50630 or by e-mail at jterwilliger@cnbank.com.