economy
Market volatility poses a serious risk for new retirees. Here’s how to prepare
Investors within a decade of retirement may want to ensure their portfolio allocation will limit the impact of retiring into a down market, advisors say.
TL;DR
- Sequence of returns risk means the order of gains and losses matters when liquidating investments.
- Planning for sequence risk should begin three to five years before retirement.
- Market volatility is expected to continue due to geopolitical uncertainty and inflation fears.
- New retirees are more vulnerable to sequence risk than long-term savers.
- Retiring into a poor market can diminish a nest egg, especially with high withdrawal rates.
- Understanding retirement spending needs is crucial for mitigating risk.
- Having an emergency fund of one to two years of expenses in cash can prevent selling during downturns.