(877) 829-9227

Speak with an advisor toll-free
فارسی
COMPLIMENTARY CONSULTATION
  • Home
  • Services
    • Wealth Management
    • Retirement Planning
    • Tax Planning
    • Risk Management & Insurance Planning
    • Legacy Planning
    • Schedule a Meeting
  • About Us
    • Our Team
    • Giving Back
  • Events
    • Webinars
    • Seminars
  • In The Media
    • Radio
    • Media Trust
  • Contact Us
  • News
COMPLIMENTARY CONSULTATION

(877) 829-9227

Speak with an advisor toll-free
فارسی
  • Home
  • Services
    • Wealth Management
    • Retirement Planning
    • Tax Planning
    • Risk Management & Insurance Planning
    • Legacy Planning
    • Schedule a Meeting
  • About Us
    • Our Team
    • Giving Back
  • Events
    • Webinars
    • Seminars
  • In The Media
    • Radio
    • Media Trust
  • Contact Us
  • News
Return to previous page
Home Blog Risk Management & Insurance Planning

How Market Cycles Can Impact Retirements

Risk Management & Insurance Planning

Sequence of returns can play a role in your overall portfolio.

 A thoughtful retirement strategy may help you pursue your many retirement goals. That strategy must consider many factors, and here are just a few: your income needs, the order of your withdrawals from taxable and tax-advantaged retirement accounts, the income tax implications of those withdrawals, and sequence of return risk.

Just what is the sequence of return risk? In brief, it is the risk that market declines in the early years of retirement, combined with steady withdrawals, could reduce your portfolio’s outlook.

A recent CNBC article mentioned how sequence of return risk can affect retirement accounts. It used a 20-year example – someone retiring in 2000 with $1 million in an account tracking the returns of the S&P 500, making withdrawals of $40,000 a year that increased 2% annually in view of inflation.

In 2000, a bear market began. The 37% pullback for the S&P 500 that occurred in 2000-02 would have reduced the $1 million account to about $470,000 by January 1, 2020, the end of the 20-year period. The balance reflects the annual withdrawals of $40,000 and the 2009-20 bull market.1

Now, if the order of yearly returns were flipped, the portfolio would show much different performance. At the end of the 20-year period, the retiree would have had more than $2.3 million in that account after the exact same schedule of income distributions.1

It’s critical to point out that investing involves risk, and past performance does not guarantee future results. The return and principal value of stock prices will fluctuate as market conditions change. And shares, when sold, may be worth more or less than their original cost.

The S&P 500 Composite Index is an unmanaged index that is considered representative of the overall U.S. stock market. Individuals cannot invest directly in an index, and index performance is not indicative of the past performance of a particular investment.

In retirement, it is vital to address risk and volatility. You have less time and may have fewer opportunities to rebuild your savings.  Fortunately, there are ways to address the challenge of sequence of return risk and manage your portfolio risk while looking for opportunities.

 

Citations

  1. CNBC, January 21, 2022
Share Post
The Power of the Consumer
The Power of the Consumer

Related posts

04 Apr
Is Inflation Peaking
Risk Management & Insurance Planning
Read more

Is Inflation Peaking?

Growth through innovation/creativity. Rather than be constrained by ideas for new products, services and new markets coming from just a few people, a Thinking Corporation... Continue reading

Comments are closed

Recent Posts

  • 5 Steps You Should Take Now to Plan for Retirement
  • Choosing a Financial Advisor
  • When Should You Hire a Financial Advisor? Part 1
  • States Are Requiring Retirement Plans
  • Major Risks to Family Wealth

Archives

  • August 2022
  • July 2022
  • June 2022
  • May 2022
  • April 2022
  • March 2022
  • February 2022

Categories

  • Business Consulting
  • Estate Planning
  • Retirement Planning
  • Risk Management & Insurance Planning
  • Tax Planning
  • Uncategorized
  • Wealth Management

CHECK US OUT

CONTACT US

Phone: (877) 829-9227

Fax: (949) 502-7006

Email: info@KananiAdvisoryGroup.com

Location: 16510 Bake Pkwy., Suite 100 Irvine, CA 92618

SOCIAL LINKS

Facebook Instagram Youtube

Form ADV Part 2A – Firm Brochure

Form ADV Part 3 – Client Relationship Summary

Investment advisory services are offered through Kanani Advisory Group, a Registered Investment Advisor. David Kanani CA License #0B34918, Neda Kanani CA License #0L51510. We are an independent financial services firm helping individuals create retirement strategies using a variety of investment and insurance products to custom suit their needs and objectives. Investing involves risk, including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values. None of the information contained on this website shall constitute an offer to sell or solicit any offer to buy a security or any insurance product. Any references to protection benefits or steady and reliable income streams on this website refer only to fixed insurance products. They do not refer, in any way, to securities or investment advisory products. Annuity guarantees are backed by the financial strength and claims-paying ability of the issuing insurance company. Annuities are insurance products that may be subject to fees, surrender charges, and holding periods which vary by the insurance company. Annuities are not FDIC insured. The information and opinions contained in any of the material requested from this website are provided by third parties and have been obtained from sources believed to be reliable, but accuracy and completeness cannot be guaranteed. They are given for informational purposes only and are not a solicitation to buy or sell any of the products mentioned. The information is not intended to be used as the sole basis for financial decisions, nor should it be construed as advice designed to meet the particular needs of an individual’s situation. The National Ethics Association (NEA) is a paid membership organization. All NEA Background-Checked members have successfully passed the annual seven-year background checks for criminal, civil, and business violations in order to meet the membership standards. However, the association provides no guaranteed assurance warranty of the character or competence of its members. Always make financial decisions on the basis of your own due diligence.

Kanani Advisory Group. © 2022 All rights reserved.