🧓🏼Retirement Income & Traditional Portfolio:

Protecting Your Wealth from Market Volatility

Did you know?

Experiencing negative returns early in retirement can dramatically reduce the longevity of your savings. This phenomenon — called the “sequence of returns risk” — means you could outlive your money if the market dips early in your retirement years.

To safeguard your retirement income, consider adopting these complementary strategies:

💧 1. Maintain a Pool of Liquid Assets

Build a cash reserve to cover 2–3 years of essential retirement expenses. This helps you avoid selling long-term investments during a market downturn.

• ✅ Acts as a buffer in volatile markets

• ✅ Gives your portfolio time to recover

• ✅ Can be replenished when markets perform well

Examples: High-yield savings accounts, money market funds, short-term bonds

💼 2. Integrate Annuities into Your Strategy

Annuities can provide guaranteed income for life and shift the risk of market volatility away from you.

✅ Benefits:

• Provides steady income regardless of market conditions

• Reduces longevity risk (risk of outliving your assets)

  
  

⚠️ Important Considerations:

• Issued by insurance companies: Guarantees depend on the financial strength of the issuer

• Costs involved: Contract limitations, admin fees, investment management fees, mortality & expense fees

• Surrender charges: Typically higher if funds are withdrawn early in the contract

• Tax implications:

  • Income is taxed as ordinary income

  • Withdrawals before age 59½ may incur a 10% federal penalty (unless exceptions apply)

    
    

🔄 Variable Annuities with Guaranteed Minimum Withdrawal Benefits (GMWB):

• Increase total retirement income

• Lower portfolio risk

• Offer flexibility with downside protection

⚖️ Blending Investment Vehicles in Retirement

Before retirement, portfolio optimization focuses on:

• Diversification across asset classes

• Balancing risk and return

  
  

In retirement, the strategy shifts to:

• Generating stable income

• Reducing market-related risks

• Integrating tools like annuities, bonds, and cash reserves

A holistic approach combines investment returns, withdrawal strategy, and income guarantees.

🛡️ Final Insight: Plan for More Than Just Returns

A successful retirement strategy is not only about maximizing returns — it's about:

• Understanding the sequence of returns risk

• Building a cushion against early downturns

• Creating predictable income

• Being ready for unexpected life or market events

📌 Bottom Line: Blend traditional investment portfolios with income-focused products like annuities and liquid cash reserves to retire with confidence and peace of mind.