a person who is hit with a windfall will struggle more with preserving their wealth
Cherry Hill Nj (PRWEB) August 04, 2015
In a recently published blog post, Brent Meyer, the co-founder and President of Safe Money Resource has indicated that the “sequence-of-return risk” is the biggest threat that can influence a long-term retirement strategy. It is relevant to mention here that SafeMoney.com is a popular online platform offering high-quality resources for financial education. The website regularly publishes insightful and useful articles on topics such as annuities, life insurance, IRAs, Social Security benefits, estate planning, retirement income planning, and more.
The financial well-being of a retiree depends on many factors including healthcare costs, unexpected emergencies, periods of financial duress, or other situations. Brent Meyer feels that all of these factors may have a serious impact on the future of a retired person. However, Brent mentions in his recent post that a long-term retirement strategy gets influenced the most by a major market correction or a market downturn.
Explaining how an early market downturn impacts retirement, Brent states, “Even if the average annual returns over time are similar, a person who is hit with a windfall will struggle more with preserving their wealth. They will have a more difficult time in retirement than someone who suffers from a market correction in later years. Even someone with higher annual returns can still suffer more if they have financial losses earlier in retirement.”
The blog post published in Safemoney.com also mentions that this “sequence-of-return risk” clearly indicates the importance of retirement timing. Recovering from financial losses can be extremely difficult in the retirement years. In many instances, this problem forces people to withdraw retirement savings to cover their living costs.
Talking about the best way to eliminate this risk, Brent says, “A retirement plan should account for all factors, including worst-case scenarios. After all, it’s not ideal for you to have to liquidate your investment assets to cover your losses. Or worse: if initial returns are low for a long period, in the future you may not have enough money to reap the full benefits of a market rebound. ”
Brent also suggests that it is extremely important to plan for a retirement number that may help minimize the impact of any emergencies or market corrections.
He suggests a number of factors to be considered for retirement number planning. Some of these factors include:
- Current retirement number.
- Accountability for events such as emergencies or financial windfalls from market corrections.
- Goals in retirement.
- How the retiree is tapping the sources of income for his/her retirement needs.
- How the retiree plans using his/her personal savings for retirement.
- For the retired, how much of the investment portfolio is allocated in volatile markets.
- For those planning to retire, how much of the investment portfolio will be in volatile markets.
- How social security fits into the retirement plan.
To wind up the discussion, Brent mentions, “Aside from avoiding sequence-of-return risk, a retirement plan accounts for the basics: covering living expenses, long-term care costs (if applicable), and healthcare costs. Be sure to consult with a qualified financial professional to plan for your unique needs, goals, and objectives.”
To read this entire blog post, please visit http://safemoney.com/one-of-the-biggest-threats-to-retirement
Safe Money Resource is a team of qualified, independent finance advisors, agents, and annuity experts. A wide range of products from as many as forty well known insurance companies are also available here. Their “Safe Money Approved” advisors are rated highly at the local level for their proficiency in finance related matters, high integrity, and uncompromised work ethics. More information can be found at http://safemoney.com/local-advice/find-an-advisor.