Risk 5: What if my portfolio loses value near retirement? Stock market performance just before and early in retirement can have a profound effect on the amount of income your savings will generate. Significant market gains can boost long-term income potential, and significant losses can
• hurt long-term income potential,
• result in a reduced standard of living in retirement, and/or
• lead to retirement delays.
This hypothetical example shows how market fluctuations could
affect the retirement savings of two couples, the Hatfields and McCoys. Both couples retire at age 65 with $500,000 invested in stocks, earn 9% on average each year during retirement, and withdraw 4% each year for income adjusted for annual average inflation of 2.4%. TIMING IS KEY The market declines early in the Hatfields’ retirement. Although, the Hatfields, like the McCoys, earn a 9% average annual return, their early losses may result in the depletion of their savings if they live too long. In contrast, the McCoys don’t experience a significant downturn until they are two decades into retirement and have ample retirement funds.
WealthLock SM Accumulator
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