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I remember getting calls from potential clients asking me to help them after they moved all their money out of equities in response to a major market downturn – particularly during the 2007-2009 recession caused by the mortgage crisis.
I would tell them that I wish they had called me before taking such a drastic step as I could have helped them modify their asset allocation rather than get out of the market entirely.
Everyone has a great risk tolerance when the market is hot. But you need to consider that markets fluctuate and have an asset allocation that you can live with during times when markets are down.
Even the most famous economists don’t know for sure what the markets will do. Market timing doesn’t work.
Perhaps some people are finding out now that they need to de-risk a bit. People who have recently retired or are about to retire need to consider sequence of return risk as big losses during this period can have a serious long term impact on their investments.
The value of guaranteed income in retirement can’t be overstated. That’s why I’m a big fan of delaying Social Security for at least the higher earning spouse unless both spouses have short life expectancies or there are other unique circumstances. It’s the best annuity money can buy and offers inflation protection without any market risk.
As for possible cuts in Social Security benefits down the road due to underfunding, I find it hard to imagine people who are already collecting benefits being affected as it would be political suicide.
Everything has some risk. Annuities have carrier risk and some also have market risk.
I suggest getting professional advice if you need assistance. It’s worth the money!
Francine Duke
“As for possible cuts in Social Security benefits down the road due to underfunding, I find it hard to imagine people who are already collecting benefits being affected as it would be political suicide.”
I wish I could be so sure. Just in the past decade we’ve seen changes to long-standing policy. Here’s a pair. The limit for property tax deduction dropped to $10K. Prior to 2020 designated beneficiaries that inherited IRAs could withdraw the funds over the course of their lifetime, now only spouses can. So it isn’t beyond belief Social Security benefits could be reduced or taxed.
I tend to agree with Fran, but I wouldn’t wager money on it. We live in screwy times.
I heartily agree with the value of both guaranteed income and professional advice in retirement. For guaranteed income between us my wife and I have delayed SS, delayed pensions, deferred compensation invested in low risk funds, deferred annuities and TIPs bond ladders. We also have a financial planner specializing in retirement advice with a conservative approach who has been very helpful with comprehensive planning and peace of mind.
I agree Rob with Dlaying SS for the greatest payout.
For me, as long as the health is good and I am doing health oriented actions, I am enjoying my monthly deposit. Every COLA is also as high as I could get.
I took the idea of not thinking about getting back all of my over 50 years of contributions.
I rather am living a life of financial ease for what years I have left.
I framed my “You won’t get a higher amount, so apply now” letter from the SS folk.
I also found two retirement plans that came with a job and in the last one, I also maxed out as it was set up to be flexible as to how the individual managed his work life.
Time on the job, and earnings were the detriments so I worked until 70, did all the overtime and holidays possible.
That and other actions on my part means I’m doing OK indeed.
Delayed gratification works well!