The last five working years and first five in retirement can be fraught with risk for American savers. During this “fragile decade” a bad sequence of returns can have a negative and lasting impact on client portfolios, and threaten the ability to make retirement savings last.
For instance, a client who suffers a 33 percent decline in portfolio value would need to achieve a 50 percent gain to recoup those losses. Such a loss at age 30 leaves the client with decades to recover.
The same loss between the ages of 60-70, however, would not only leave a much smaller window of opportunity to recover from the portfolio loss, but would also amplify the deficit since the client is simultaneously making withdrawals.
Advisors may insure client retirement income streams against this sequence of returns risk early in retirement by leveraging next-gen guaranteed living withdrawal benefits available in today’s fee-based advisory annuities. Learn how.