Risks

Volatility & Inflation

Don’t let the economy delay your retirement, or worse, take you out of retirement and back to work. Prepare yourself for a declining market with a diverse array of investments, each tailored to keep you afloat when times get tough.

When you’re ready to retire, what if inflation skyrockets and a stock market crash destroys the money in your 401(k)? Suddenly, the retirement you planned and saved for is looking a lot farther away than you thought.

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This is a scary reality that lots of people are living right now, with 25% of Americans delaying their retirement in 2022, citing inflation as the culprit. Many are watching as their retirement accounts shrink while they withdraw more money than they’re used to as costs rise. Ideally, in a bull economy, your account’s continued growth will offset your withdrawals. If the economy suffers for a prolonged period of time, however, your increased withdrawals could significantly reduce your rate of return as your losses compound, increasing the risk that you outlive the money you’ve saved. This is especially damaging if the market suffers early in your retirement, as your account may never fully recover.

Inflation, interest rates, and market volatility are a huge risk, but it doesn’t have to send you back to work. It’s just more proof that planning for and evaluating risk is an essential component to living the retirement of you dreams. Fortunately, if you’ve diversified your portfolio with a collection of high-risk and low-risk investments, you can weather a bad economy. Consider these products and withdrawal strategies to beat a bear market.

See the examples below that we can help you plan for:

  • Guaranteed Income

    Use reliable retirement products to reduce the amount you need to withdraw from your investment accounts, like an annuity or Whole Life policy.

  • Dynamic Spending

    As you age, it’s best to adjust your withdrawals of retirement money each year, based on the rates of inflation and volatility in your retirement portfolio.

  • Diverse Asset Classes

    Keep a cash reserve outside of the market to utilize when markets are low. Invest across multiple asset classes, with high-value stocks and bonds that perform well under stress.

  • Cash Accounts

    Dollar-Cost Averaging

    Utilize income from alternative investments like dividends and real estate to invest at fixed intervals, capitalizing on cheap equity.

TOP ADVICE:

Diversify your retirement portfolio with a collection of low-risk and high-risk investments and products, reducing your reliance on market-dependent resources.

  • Sequence your withdrawals based on the performance of accounts. Lots of inflation? You can potentially cover the increase with Whole Life Insurance and annuities, so you can keep your investment losses from compounding.

  • One enormous 401(k) will not help you as much as money that’s spread across different kinds of financial products, designed to work together.

  • Yes, Social Security annually adjusts for inflation, but often times it’s not enough to cover increasing costs. Don’t rely on these adjustments to maintain your lifestyle as prices rise.

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