financial planning in retirement

Times of market volatility are never pleasant, but they pose a particular threat to you as you near and enter retirement. The state of the market just before you retire can impact your returns throughout your entire retirement. This is because once someone takes withdrawals from a fund’s underlying investments, they expose themselves to sequence of returns risk.

It’s important to beware of sequence of returns risk as you enter retirement because the state of the market at the time of your retirement is not within your control. Even if you’ve saved diligently your whole working life, a market downturn around the time of your retirement can have a serious negative impact on your wealth. In fact, two retirees with identical wealth and long-term market averages in retirement can have very different financial outcomes depending on the state of the economy when they begin retirement.

Someone retiring during a bear market might see their portfolio recover as the market does, but they will also see a reduction in the overall return of their portfolio because of how much they had to withdraw early on when prices were down. Withdrawing funds while your portfolio loses value can negatively affect your returns throughout retirement.

If someone with a similar portfolio retires during a bull market, they can take withdrawals of fewer equities and lower their risk of causing smaller returns throughout retirement. This is because there are more equities left to generate returns later on.

Retirement shouldn’t be a time of anxiety or worry, it should be a time when you feel financially secure, and can enjoy the money you’ve worked hard to earn for decades. There are ways to protect against sequence of returns risk other than delaying your retirement. If you’ve saved and invested, you can help to protect what you’ve earned by moving away from higher risk stocks, diversifying your portfolio, and developing strategies to help survive volatile markets.

As you enter retirement, beware of sequence of returns risk. Before you start withdrawing from your retirement accounts to boost your income, talk to a financial advisor about shifting to a lower-risk portfolio. The professionals at SHP Financial can help you create a plan that minimizes risk as you enter and live in retirement. Click here to schedule you no cost, no obligation financial review today.

The content presented is for informational purposes only and is not intended as offering financial, tax, or legal advice, and should not be considered a solicitation for the purchase or sale of any security. Some of the informational content presented was prepared and provided by tMedia, LLC, while other content presented may be from outside sources believed to be providing accurate information. Regardless of source no representations or warranties as to the completeness or accuracy of any information presented is implied. tMedia, LLC is not affiliated with the Advisor, Advisor’s RIA, Broker-Dealer, or any state or SEC registered investment advisory firm. Before making any decisions you should consult a tax or legal professional to discuss your personal situation.Investment Advisory Services are offered through SHP Wealth Management LLC., an SEC registered investment advisor. Insurance sales are offered through SHP Financial, LLC. These are separate entities, Matthew Chapman Peck, CFP®, CIMA®, Derek Louis Gregoire, and Keith Winslow Ellis Jr. are independent licensed insurance agents, and Owners/Partners of an insurance agency, SHP Financial, LLC.. In addition, other supervised persons of SHP Wealth Management, LLC. are independent licensed insurance agents of SHP Financial, LLC. No statements made shall constitute tax, legal or accounting advice. You should consult your own legal or tax professional before investing. Both SHP Wealth Management, LLC. and SHP Financial, LLC. will offer clients advice and/or products from each entity. No client is under any obligation to purchase any insurance product.
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