Retirement income planning is different from traditional wealth accumulation. The combined impact of retirement risks is that retirees experience reduced capacity to bear financial market risk once they have retired. They also must meet spending goals by taking distributions from their asset base. This calls for more integrated strategies other than just having a portfolio of stocks and bonds. In today’s ultra-low interest rate and yield environment, you may not be able to generate the type of income your parents have in the past by sticking to those two asset classes.
A very big issue that many new retirees overlook is something called the ‘sequence of returns risk’. Sequence-of-returns risk is the risk of receiving lower or negative returns early in a period when withdrawals are made from an individual's underlying investments. The order or the sequence of investment returns is a primary concern for retirees who are living off the income and capital of their investments.
It is not just long-term average returns that impact your financial wealth, but the timing of those returns. When retirees begin withdrawing money from their investments, the returns during the first few years can have a major impact on their wealth. Two retirees with identical wealth can have entirely different financial outcomes, depending on when they start retirement – even if the long-term market averages are the same.
If you are within five years of retirement, it is recommended that you evaluate your current planning to determine if you have a plan to generate the income you’ll need. If you have concerns about this issue, we offer you our Complimentary Second Opinion Service to help you get the answers you seek. To request this complimentary service today, call 713.524.7500 or email us at email@example.com.
We are an independent financial services firm helping individuals create retirement strategies using a variety of investment and insurance products to custom suit their needs and objectives. Investment advisory services are available on a fee-basis through Global Financial Private Capital, LLC, an SEC Registered Investment Advisor. Jim Sloan & Associates and Global Financial Private Capital, LLC do not provide tax or legal advice. You should consult your own tax or legal professional on any such matters. If you don’t have one, we could provide a list of several to interview.
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