Why Does Investment Risk Feel Different in Retirement?

When I was a kid, my friends and I used to grab the big metal bumpers of passing cars and let them pull us along our icy neighborhood streets. We thought it was fun. Looking back, I cannot believe we took that risk.

Retirement brings less obvious risks. While you are working, a market downturn may be unsettling, but your paycheck can still cover the bills. Once you retire, you may be withdrawing money from those same investments to live on. A decline can affect your income as well as your account balance.

The timing matters, too. If you sell investments to cover expenses during a downturn, those shares cannot benefit from a later recovery. That is part of what makessequence of returns risk so important early in retirement.

I do not believe in planning from a place of fear. I believe in knowing how you will cover your expenses if markets have a difficult year. A written retirement plan can help you think through those decisions before you need to make them under pressure.

If you would like to talk through how market changes could affect your retirement income, you can reach our team atLegacyRetirementGroup.com.