904-232-8760 www.wolfretirement.com MONTHLY August 2017 RET IREMENT NAV IGAT ION
Threats on the Horizon How You Can Avoid These Risks to Your Retirement
Interest Rate Fluctuations Years ago, when interest rates were higher, the need to dip into your principal to live was lower. For many, your savings was able to generate enough safe income with higher historic interest rates. Nowadays, interest rates are near historic lows, and retirees need smart ways to generate reasonable growth in our lower interest rate environment. Retirement Income Fluctuations This is a risk that stems from both stock market and interest rate fluctuations. If your portfolio performs well, you might enjoy higher income month to month, but if the market were to suddenly decline, you could see your income fall alongside it. Additionally, your retirement income could be impacted by factors that have nothing to do with the income, such as death or divorce. If you get divorced or if your spouse passes away, their pensions or Social Security could be lost, and you can no longer rely on that income to meet your lifestyle. These aren’t just random risks. Historically, these fluctuations are a major threat to a person’s retirement. Thankfully, there are many ways to prepare for and overcome these risks. Most retirees would be better suited to a more diverse portfolio, one that meets their growth concerns, produces guaranteed income to cover their retirement expenses for life and protects savings. Furthermore, when you’re dealing with a market that could take a
It’s been over eight years since the bottom of the most recent stock market crash in March 2009. In that time, the S&P has risen over 250 percent, reaching record-breaking highs. We’re currently in the second longest bull market in history. It’s a good time to be planning your retirement, and many economists are seeing clouds approaching the horizon. While we enjoy these good times, it’s always wise to prepare for when things get rocky. In my experience, I’ve identified and helped to combat three common threats to my clients’ retirement plans. We’re currently in the second longest bull market in history. It’s a good time to be planning your retirement, and many economists are seeing clouds approaching the horizon. Stock Market Fluctuations If you’ve ever watched financial stock market news, even for just a single day, you’ve seen market fluctuations in action. If you’ve invested in the stock market, you’ve felt these fluctuations firsthand. Up or down, good or bad, the stock market is always moving. Only having a stock market-based portfolio in retirement can seem great because of all the potential for gains. However, putting the majority of your savings at risk can be less than ideal.
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turn for the worst at any time, it would be in a retiree’s best interest to have a tactical portfolio that’s actively managed in case of any threats. We need to be aware of the risks and be smart about how we handle these risks. Worst-case scenario planning isn’t negative thinking. It’s smart strategy. Take a step back. Look at where you are, where you want to be, and all the obstacles that could go wrong to prevent you from getting there. Then make a plan to overcome those obstacles.
– Adam Wolf, CPA, CFP ®
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