by Dave Kutcher
The market was quite a ride in 2022. Even folks that manage their investments in what is a traditional mix of stocks (equity) and bonds (debt) likely found themselves with one of the worst performing years since 2008. On average we see about a 15%-16% loss on those types of portfolios.
There were plenty of slings and arrows; record breaking inflation, enormous increases in interest rates, energy costs through the roof and on-going threats of global unrest have all contributed to a very rocky investment climate.
It is tough to sit here and make predictions about what is to come either in the short or long term. We do know the longer your view the less impactful some of these slings and arrows appear. If you have years and years until retirement, some of these current events may seem harmless and you are relying on the long-term trends of the past to imply you will be treated fairly over the many years ahead of your retirement.
Our practice is in working with folks in their ten-year window, however, and for these people, the slings and arrows are of extreme importance. The 5 years approaching a retirement start date and the first 5 years following a retirement start date can make or break a retirement income planning strategy. When combining poor market performance with the need to produce spendable income from your retirement funds, the poor performance of a year like 2022 can be devastating.
We have talked about negative sequence of returns before, so for some you this may seem like a familiar conversation. Negative returns at times when income is needed creates an environment that results in lower spendable income or a very real risk of running out of money in the years ahead. Neither of those things is a welcome conversation for anyone contemplating their retirement income needs.
How do you contemplate forgoing income today when inflation remains rampant and rising interest rates don’t seem to be making a dent.
What we find interesting is that the financial industry is now creating solutions that try and mirror what we have been doing for years with folks in their ten-year window. Our focus has always been safety, growth, and control. We have been wrapping folks in a financial security blanket for years by providing solutions that eliminate downside market risk while still providing ample opportunity for growth.
We don’t think retirement should be a time filled with anxiety and concern and so we tend to build solutions that provide ample income to meet your current day living expenses while maintaining growth on your overall retirement nest egg to meet the needs of your future years.
If you are in that ten-year window, it is time to clean the glass. We understand the economic uncertainties that are smudging the panes and impeding your ability to see the future more clearly.
I am Dave Kutcher, a retired Marine Corp Captain and founder and owner of Kutcher Financial Services in Eagle River. We are on the radio every Saturday morning, “Retirement in the Last Frontier”, 8:30-9:30 on AM 650, Keni Radio. Kutcher Financial Services, 10928 Eagle River Road; Eagle River, AK 99577, (907) 795-7452.