Eliminating Risk

Risk EliminationFundamentally, once you are within 15 years of retirement, your retirement planning strategies should be changing and moving toward conservative types of asset classes.
When you’re younger, you can handle a little market risk. After all, when stocks tumble, you have time for them to recover and increase in value again. That’s not the case as you get closer to retirement. The impact of a down market just before or during retirement is immediate and compounded by withdrawing income from your savings. This is the risk of retiring at the “wrong time.”

Consider the hypothetical case of two retirees. They both began retirement with $500,000 and both planned to withdraw 5 percent a year, or $25,000.

Retiree One Retiree Two
Starting retirement account $500,000 $500,000
Year 1 withdrawal $25,000 $25,000
Year 1 annual return -10% 0%
End of Year 1 balance $427,500 $475,000
Year 2 withdrawal $25,000 $25,000
Year 2 annual return -15% 0%
End of Year 2 balance $342,125 $450,000

In this hypothetical scenario, Retiree One retired just as the stock market tanked. In addition to withdrawing 5 percent, they lost a significant amount of principal because of the market decline. After just two years, their retirement savings account had already lost a third of its value. Retiree Two, on the other hand, has over $100,000 more in retirement savings remaining.

While this is a hypothetical scenario, many retirees have felt the misfortune of retiring at the “wrong time.” Unfortunately, nobody has a crystal ball to see when the market will rise or fall.  Infinite Wealth Advisors can help you reduce the risk of losing retirement savings to market losses through the use of equity indexed annuities.  We also help you address other risks to your retirement savings, such as taxes, inflation and the risk of running out of money because of how long you may live.


13545 – 2014/7/10


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This information has been provided by a licensed insurance professional and does not necessarily represent the views of the presenting insurance professional. The statements and opinions expressed are those of the author and are subject to change at any time. All information is believed to be from reliable sources; however, presenting the insurance professional makes no representation as to its completeness or accuracy. This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, accounting, legal, tax, trust and estate, or investment advice. Infinite Wealth Advisors is not an investment advisory firm.  Investment Advisory Services provided by NAMCOA® – Naples Asset Management Company®, LLC, a federally registered investment advisor, website: www.NAMCOA.com .