When you’re cruising down the open road and everything is going smoothly, you’re probably not thinking about getting a flat tire. But, the reality is that it can happen at any time. Do you have a tire jack, lug wrench, and spare tire in the trunk? An under-inflated tire caused by a slow leak can be a dangerous issue if left unattended. And, getting stranded without the proper equipment isn’t much fun either. Just as it’s important to take care of these kinds of issues with your car, it’s important to be prepared for adverse financial events.
We’ve seen major market ups and downs recently, which may have you thinking about your financial security and if you’re taking on too much risk. Two retirees with identical wealth and long-term market averages can have very different financial outcomes depending on the state of the market when they begin retirement. This is called “sequence of returns risk,” and it’s a bit like getting a flat tire on your road to retirement.
For example, if you were to retire during a bear market, you might eventually see your portfolio recover as the market does, but you may also see a reduction in the overall returns of your portfolio if you had to withdraw when prices were down. This means that if you are withdrawing from your portfolio in a down market, it may fail to recover as the market recovers, and the overall value of your portfolio could potentially decrease over the course of your retirement.
Just one unexpected hitch in your plan, like a flat tire, can throw off an entire day if you get caught unprepared. Imagine what would happen if one unanticipated issue threw off your retirement plan or put your nest-egg in jeopardy. Being unprepared for changing market conditions can potentially wreak havoc on your retirement plan, so it’s important to understand if you’re taking too much risk with your portfolio. But just like with a flat tire – if you’re prepared, you won’t panic.
If the open road is in your future this summer, you’ll likely be prepared for a flat tire. Why not make the same effort to prepare for the next market drop, recession, or other retirement threat? In the end it’s all about preparation. It’s better to go through life knowing that you’re the kind of person who is prepared for the occasional flat tire life throws your way.
We aim to help our clients achieve their retirement goals with our comprehensive retirement planning process. If you want to learn how to be prepared and have your own comprehensive retirement plan, then schedule a time to meet with us. In the end, don’t let something like a flat tire derail your retirement. And remember, with a little planning and preparation you’ll be ready for your big retirement road trip.
Disclosure: Because investor situations and objectives vary this information is not intended to indicate suitability for any individual investor.
This is for informational purposes only, does not represent legal or tax advice does not indicate suitability for any particular investor, and does not constitute an offer to purchase or sell investments. Investments in securities involve a high degree of risk and should only be considered by investors who can withstand the loss of their investment. Prospective investors should carefully review the “Risk Factors” section of any prospectus, private placement memorandum, or offering circular.
Statements concerning financial market trends are based on current market conditions, which will fluctuate. Past performance is not indicative of future results.
Advisory Services are offered through Asset Strategy Advisors, LLC (ASA), a SEC Registered Investment Advisor. Securities offered through registered representatives of Concorde Investment Services, LLC. (CIS) or RCX Capital Group, LLC (RCX), both members of FINRA/SIPC. Insurance Services offered through Asset Strategy Financial Group, Inc. (ASFG). ASA, CIS, RCX and ASFG are independent of each other. All research reports from third parties are for informational purposes only.