by Dave Kutcher
We’ve all heard the old adage before, “Timing is Everything”. This statement couldn’t be more true when it comes to making sure you don’t outlive your money during your golden years.
People need to understand that you can drown in water that averages 6” deep. Average rates of return are used all the time in the financial planning business, however, models used to determine how much money you can safely take out of your retirement plans rarely address a very real risk at this important time in your life and that risk is the impact of the sequence of your returns.
We could take two people with virtually the exact same financial picture; same amount of money in their nest egg, same amount of money needed for retirement income, same exact average rate of return on their money, etc. And yet, those two people could have drastically different results depending upon “when” they received their positive and negative returns in their 401(k) or IRA. The impact of negative investment results in the early years of your retirement have a much more dramatic impact on how much money you will have left in your later years.
What if you are retiring now or in the near future; markets are extremely volatile, inflation is at record highs, groceries, utilities, gasoline, and rapidly rising interest rates are all very real-life issues that make a difference in people’s lives. The notion of sacrificing retirement income during times like these leave many people with a conundrum that seems hard to overcome.
There are options to manage this sequence of return risk, but solutions that still allow someone to enjoy adequate retirement income are few and far between, and we know we have some very special options for people that simply are not talked about up here in America’s Last Frontier.
We think it is important for people to enjoy their money without undue stress. When you are younger and healthier, you want to be able to maximize your retirement income so you can best enjoy this fun and exciting time in your life. Whether it is outdoor adventure, travel to places you enjoy or wish to experience, spoiling the grandkids or simply not spending everyday pinching pennies for future years, the early years of your retirement should be those you most enjoy.
If you don’t have a component of your retirement money in plans that can mitigate negative investment results during the distribution phase of your financial life, you are sacrificing the full enjoyment and opportunity that awaits you.
Safety, growth and control are key words we incorporate into everything we do at Frontier Retirement. You owe it to yourself to find out more and we would love the opportunity to share with you how we can help you eliminate downside risk (negative market returns) without sacrificing growth during retirement.
Nobody else seems to be talking about this. We are here to change that conversation and make sure people understand there are other options beyond personal sacrifice.
I am Dave Kutcher, a retired Marine Corp Captain and a managing principal at Frontier Retirement in Eagle River, AK. You can catch me on the radio every Saturday morning, “Retirement in the Last Frontier”, 8:30-9:30 on AM 650, Keni Radio. Frontier Retirement, 10928 Eagle River Road; Eagle River, AK 99577, (907) 795-7452.
