Planning for Retirement Income Within an Increasingly Volatile and Uncertain World
As a result of the quickly evolving economic, market and public health environment created by the coronavirus pandemic, many Americans are looking for guidance on whether and how to adjust their retirement plans and financial advisors are looking for resources to inform and educate clients. Some of the anxiety brought on by big swings in the markets – up or down – is a normal response to a predictable risk. Experts call it “sequence of returns risk,” and it refers to the long-term impact on an individual’s retirement income plan from a significant drop in the stock market during the years immediately prior to or during the first decade post-retirement. Recently, our firms partnered to conduct new analysis and research on the impact that sequence-of-returns can have on individual retirement income plans.
Prior to the pandemic’s onset and its economic repercussions, Americans were enjoying more opportunities in retirement than preceding generations. Only time will reveal the long-term effects of recent events. However, the evolving picture of what the next phase of life should and can be – the “new retirement” in some parlance – has been met over the last several years by and large with hope, optimism and excitement. Hope, however, should not be the basis for a truly comprehensive retirement “income” plan, with the current market downturn being an all too poignant reminder of that.