Overcoming Sequence of Returns Risk in Retirement

Shawn Plummer, CRPC

Chartered Retirement Planning Counselor

The Basics of Sequence of Returns Risk

Sequence of returns risk refers to the danger that the timing of withdrawals from your retirement account will negatively impact your overall rate of return. This risk is particularly significant when you start making withdrawals from your investment portfolio or annuity during a market downturn. When market prices decline as you begin to withdraw, the combination of losses and withdrawals can deplete your savings faster than expected, compromising your financial stability in retirement.

How To Overcome Sequence Of Returns Risk In Retirement

Using Fixed Index Annuities to Safeguard Your Income

Fixed index annuities can be a valuable tool to mitigate sequence of returns risk. These financial products offer a balance between growth potential and protection. Returns are tied to a stock market index or a fixed interest rate, but they come with a guaranteed minimum interest rate. This ensures that your principal is protected from market downturns. Additionally, all interest earned is locked in and cannot be lost due to market performance, offering you peace of mind and financial security even in volatile markets.

Guaranteed Lifetime Withdrawal Benefits (GLWB)

Guaranteed Lifetime Withdrawal Benefits provide a way to ensure a steady income stream for life, regardless of market performance. As an add-on to an annuity contract, GLWB allows you to receive a certain percentage of your annuity’s value each year, offering financial predictability and stability. This means you can confidently plan your retirement budget, knowing you have a reliable income source.

Benefits of Using Fixed Index Annuities and GLWB

Flexibility: Many fixed index annuities offer options for liquidity and death benefits, adding to their appeal.

Protection Against Market Volatility: Fixed index annuities shield your income from market downturns, ensuring your financial stability.

Guaranteed Income Stream: GLWB provides a steady income for life, helping with budgeting and financial planning.

Potential for Growth: These annuities offer growth potential based on stock market performance or a fixed interest rate while still protecting your principal. All interest earned is locked in and cannot be lost due to market performance.

Sequence Of Return Risk

How We Can Help

At The Annuity Expert, we understand the challenges you face in securing a stable retirement income. Sequence of returns risk can be daunting, but with our 15 years of experience as an insurance agency, annuity broker, and retirement planner, we offer you the expertise and solutions you need.

We believe in finding the best solutions at the lowest costs for our clients. We aim to ensure you have a financially secure and worry-free retirement. By choosing the right annuity products and strategies, you can protect your retirement income and enjoy the peace of mind you deserve.

Sequence Of Returns Risk Illustration

What We Recommend

Step 1: Initial Consultation

The first step is to schedule an initial consultation. During this meeting, we will discuss your financial goals, current retirement plans, and concerns about market volatility. This step’s main benefit is understanding your unique financial situation and how we can tailor our services to meet your needs.

Step 2: Personalized Plan Development

Next, we will develop a personalized retirement income plan for you. This plan will incorporate fixed index annuities and GLWB to protect your income. The main benefit here is having a customized strategy that aligns with your goals and provides financial security.

Step 3: Implementation and Ongoing Support

Finally, we will implement your plan and provide ongoing support. This includes regular reviews and adjustments to keep your retirement income strategy on track. The main benefit of this step is achieving a stable, reliable income throughout your retirement, allowing you to enjoy your golden years without financial stress.

Features and Benefits

  • Expert Guidance: Our 15 years of experience ensure you receive knowledgeable advice.
  • Customized Plans: Tailored strategies to fit your specific needs.
  • Guaranteed Income: Fixed index annuities and GLWB provide reliable, lifelong income.
  • Market Protection: Safeguard your retirement savings from market downturns.

Addressing Common Objections

Some might worry about the complexity or costs of annuities. However, we simplify the process and find cost-effective solutions tailored to your financial situation. Not addressing the sequence of returns risk can lead to significant financial instability, while our approach ensures your peace of mind and financial security.

Choosing The Annuity Expert means you will experience confidence, security, and the joy of a worry-free retirement. Contact us today for free advice or a quote.

Sequence Of Returns Risk

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Frequently Asked Questions

What is the sequence of return risk?

The sequence of return risk is the risk that the order in which returns are received can affect the overall performance of an investment portfolio.

How does the sequence of return risk impact investors?

The impact of the sequence of return risk on investors can be significant. For example, a period of negative returns early in an investment timeline can significantly impact the overall performance of an investment portfolio, potentially reducing the number of funds available for future withdrawals.

How can investors mitigate the sequence of return risk?

Investors can mitigate the sequence of return risk by diversifying their portfolio, building a cash reserve, delaying withdrawals, and regularly rebalancing their portfolio.

How can I manage the sequence of returns risk?

You can take several steps to manage the sequence of returns risk, including diversifying your portfolio, considering annuities, and working with a financial advisor.

Shawn Plummer, CRPC

Chartered Retirement Planning Counselor

Shawn Plummer is a Chartered Retirement Planning Counselor, insurance agent, and annuity broker with over 14 years of first-hand experience with annuities and insurance. Since beginning his journey in 2009, he has been pivotal in selling and educating about annuities and insurance products. Still, he has also played an instrumental role in training financial advisors for a prestigious Fortune Global 500 insurance company, Allianz. His insights and expertise have made him a sought-after voice in the industry, leading to features in renowned publications such as Time Magazine, Bloomberg, Entrepreneur, Yahoo! Finance, MSN, SmartAsset, The Simple Dollar, U.S. News and World Report, Women’s Health Magazine, and many more. Shawn’s driving ambition? To simplify retirement planning, he ensures his clients understand their choices and secure the best insurance coverage at unbeatable rates.

The Annuity Expert is an independent online insurance agency servicing consumers across the United States. The goal is to help you take the guesswork out of retirement planning and find the best insurance coverage at the cheapest rates

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