Retirement Advisor Michael Ladin Steers Baby Boomers and Retirees Through Election Year Volatility Angst

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Miami retirement and wealth management advisor Michael Ladin published a new blog addressing the impact of election year volatility on retirement portfolios. Election cycle market volatility has been around since 1900, but America’s aging population has never had more reason to worry about how it will affect their nest eggs.

market volatility, election year market volatility, Market volatility in retirement, retirement portfolios, retirement planning

Ladin Financial Group

Volatility concerns are common among investors during an election cycle, particularly among retirees and pre-retirees.

Retirement advisor Michael Ladin of Ladin Financial Group has published a new blog addressing election year market volatility and its potential effect on retirement portfolios. Titled, “Baby Boomers and Retirees Prepare Their Nest Eggs for Election Year Volatility,” the blog examines the potential impact volatility can have on retirement income, and offers information for aging Americans looking to protect their portfolios.

According to Ladin, pre-retirees and retirees are already worried about outliving their nest egg savings; the potential for election year volatility is adding to their anxiety. Looking at historical patterns of election year volatility can help investors and advisors find practical strategies for protecting their portfolios from enhanced risks.

In any election year it is common for volatility angst to rise among investors, particularly people nearing or in retirement who fear that the race to the White House will trigger enough market volatility to diminish their savings.

2016 has already been a year of volatility, with a market swinging up and down sharply in short-term intervals over extended periods of time. Many investors, already concerned with current volatility say their worries are compounded by the general belief that the market tends to fall during presidential election cycles, Ladin says. While plenty of theories are floated regarding the election cycle / market volatility connection, Ladin focuses on three consistent historical factors:

  •     U.S. presidential election years bring about more investor uncertainty than non-election years.
  • Since 1900, the S&P 500 has dropped an average of 1.2 percent in the final year of a two-term president’s second term.
  • Anticipation over whether a new party will win the presidential election can impact market volatility.

“I focus on three areas of concern with each client portfolio,” Ladin says. “Protecting principle in times of volatility, establishing a realistic withdrawal schedule and income stream that will last throughout retirement, and expose unnecessary hidden fees that can potentially leech funds from retirement savings.”

“Removing and eliminating any real risks associated with a client’s portfolio, and helping them make good decisions about how their long term investments fare regardless of the election’s outcome, can go a long way in easing investors’ fears, he says.”

To begin with, Ladin says, it is important to discuss the investor’s goals, time horizons, risk tolerance and uncertainties regarding what the election could mean for their retirement funds to make sure their portfolio is positioned in a way that is appropriate for their unique situation and needs, and in order to achieve their retirement lifestyle vision. A practical approach to examining client portfolios allows Ladin to find ways to protect his clients’ savings, cut unnecessary expenses, and provide some valuable peace of mind.
Volatility concerns are common among investors during an election cycle, particularly among retirees and pre-retirees.

“Since a wide variety of events can impact a portfolio from day to day, it’s important to reevaluate your portfolio ahead of time for volatility risk, whether it’s an election year, an interest rate increase, or any other triggering event,” he says.

Since retirees are tapping into a variety of assets—from personal savings to pensions, IRAs and 401(k)s—establishing an individual income stream for retirement can get complicated. The process is further complicated by an exhaustive list of distribution requirements, potential penalties and tax liabilities that can seem overwhelming to the uninitiated or unprepared.

“We help clients lay a foundation for some basic steps to determine how much cash can be withdrawn without running the risk of running out of money in retirement, and find ways to turn assets into income. We categorize assets into three distinct buckets—the taxable bucket; the tax-deferred accounts bucket such as a traditional IRAs or 401(k)s, and the tax-free accounts bucket, such as Roth IRAs—to help put their nest egg into perspective,” he says. “Then we determine the most advantageous way and time to begin drawing Social Security.”

In developing a sustainable retirement strategy, age, life expectancy, living expenses and rate of return on investments are all taken into consideration. For individuals who retire after age 65 with adequate savings and in generally good health, historically the rule of thumb has been to draw down 3-4 percent of their portfolio each year, gradually adjusting that rate to account for inflation.

Ladin says that one of the most important services he offers is implementing a well-structured and sustainable retirement income strategy that allows his clients to confidently spend during retirement, and be able to handle unplanned expenditures when they come up. Some annuities may help protect an income stream as well.

“Most people won’t be able to live off their interest alone without touching principal,” Ladin says. “It’s also nice to know that some annuities can offer a guaranteed* income stream, even if the investor’s principal is exhausted over time,” he says.

Hidden fees, Ladin says, can significantly drain retirement funds, and many investors are unaware of the price they’re paying in hidden fees—some of which may not even show up on account statements or are obscurely titled in a fund prospectus. For that reason, it is essential to scrutinize client portfolios and identify any unnecessary fund fees, trading fees and sales loads (a commission paid to the salesperson of a fund) that many investors don’t even realize they are paying. Even a difference in cost of less than 1 percent can have an immense effect on an investor’s returns over time.

“Hypothetically, an investor with a $100,000 portfolio that earns an average annual return of 6 percent would have $532,899 after 30 years when paying an annual fees cost of 0.25 percent,” Boyce says. “However, if those annual fees add up to 0.9 percent, the investor will have earned only $438,976—nearly $100,000 less that they could have.”

Protecting one’s retirement savings from market volatility has never been more important. Unlike past generations, most retirees today cannot count on a predictable income stream from a defined-benefit pension once they leave the workplace. Today’s retirees spent a lifetime saving for their golden years, and If the market takes a wrong turn at the wrong time, it could mean losing years of hard-earned savings and financial security. Smart planning, and working with a trusted fiduciary portfolio advisor who has a duty to work in the client’s best interests while keeping an eye on the client’s portfolio—especially in times of volatility—can be the most beneficial strategy for achieving peace of mind throughout retirement.

  • Annuity guarantees rely on the financial strength and claims-paying ability of the associated carrier. Some fixed index annuities may have a lifetime income guarantee as part of the base policy; others may have riders available for an additional premium that provide this benefit. Annuity riders may also be available for an additional annual premium that may provide additional benefits. See your annuity contract for terms, exclusions and limitations.

To learn more about strategies for market volatility, visit the Ladin Financial Group website, email  Michael(at)ladinfinancialgroup(dot)com or info(at)ladintax(dot)com, or call (305) 444- 4898.

About Ladin Tax and Financial Group:

Ladin Financial Group, a Registered Investment Advisory firm, focuses on assisting Florida business owners, Baby Boomers and retirees with sound retirement income strategies that work in a tax efficient way. Founder and CEO Michael Ladin is experienced in asset protection, wealth transfers, estate planning life insurance and premium financing, and is registered in Florida as an Investment Advisor Representative.

The host of Retirement Radio’s “Strategies for Financial Success” on NewsTalk 610 WIOD, Saturdays at 7 a.m., Sundays at 1 p.m. Ladin co-authored the best-selling book, “The Ultimate Success Guide,” with Brian Tracy. He has been quoted in major publications, such as the Wall Street Journal and USA Today.

Since beginning his career in the financial services and insurance business more than 20 years ago, Ladin has built a reputation as a respected public speaker and consultant.

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