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You may have seen the quips about how this year the 401k accounts of many have become “201k” accounts this year due to the bear market for both stocks and bonds.
Hardly funny.
So if you want to be able to stop worrying about your retirement income, read on…
2022 has proven the traditional retirement planning model of a 60/40 portfolio of stocks and bonds, with 4% annual withdrawals to fund your retirement, doesn’t work. For a retiree counting on living off an investment portfolio, following the traditional plan means selling stocks or bonds at a loss and taking a 25% to 30% cut in their retirement income.
If you need to keep the same income, your retirement account will draw down much faster than the stock market losses plus withdrawals. Once you get behind due to a bear market, your account can never catch up, and your well-crafted retirement plan will go up in smoke.
Steep market declines come along about once a decade. Each time retirement savings are decimated. Yet financial advisors continue to use the same strategies. The retirement savings investment guidance from the financial industry has not changed since I became a Certified Financial Planner in the 1980s. Those strategies continue to get…
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