As the Market Falls, New Retirees Need a Plan

If you’re in the early stages of your retirement, you’re likely in a rough spot watching your portfolio shrink. We have some strategies to make the best of things.

photo of a worried face looking through a hole in newspaper stock listings

Anyone newly retired or nearly so must feel like they have the worst timing in the world. A portfolio tends to be largest near retirement, just before those savings are about to be drawn down. These days, however, most portfolios have lost value; the S&P 500 is down about 20% so far this year.

The financial industry has a name for this scenario: sequence of return risk. “It matters most at retirement when you’re selling assets for income,” says Wade Pfau, a professor of retirement income at The American College of Financial Services in King of Prussia, Pa. “You need to sell a larger number of shares to get the same amount of money. Those shares are then gone so even if the market bounces back, your portfolio won’t recover as much.”

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David Rodeck
Contributing Writer, Kiplinger's Retirement Report