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Does a market crash in year one of retirement ruin your plan? Yes, it certainly can. Here's how
Does a market crash in year one of retirement ruin your plan? Yes, it certainly can if you don’t have proper cash reserves ready to go. It’s called sequence of return risk. And it’s one of the most overlooked risks for anyone retiring early. Here are steps to take to minimize that risk. When you're still working, a down market is uncomfortable, but you have time to weather through because you aren’t taking income. But when you're retired and pulling income from that same portfolio, it's a different problem. You're selling at the worst prices to fund your actual life. That loss doesn't just sit there. It compounds in reverse and shrinks the base that's supposed to carry you for the next 30 years. We like to build cash buffers so clients don’t have to touch equities in a down year. And we map out which accounts to draw from first depending on what the market is doing. The portfolio doesn’t change. But the structure around how and when we access it does. That's what building a retirement income plan is all about. Converting retirement assets into retirement income. If you're within five years of retiring and you haven't mapped out how you're actually going to live off your money, that's the conversation to have now. Link in bio. #RetirementIncome #EarlyRetirement #FinancialPlanning #CFP #SequenceOfReturns #WealthManagement #RetirementStrategy #FinancialAdvisor
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Securities and investment advisory services are offered through Osaic Wealth, Inc., member FINRA/SIPC and a registered investment advisor. Additional investment advisory services offered through Strategic Financial Advisors Corporation, a registered investment advisor. Strategic Financial Advisors Corporation and Strategic Financial Services Corporation are not affiliated with Osaic Wealth, Inc.
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