As the market falls, new retirees need a plan

As the market falls, new retirees need a plan

Almost anyone newly retired must feel like they have the worst timing in the world. A portfolio tends to be larger closer to retirement, just before those savings are about to be used. These days, however, most wallets have lost value; the S&P 500 is down about 20% since the start of the year.

The financial industry has a name for this scenario: return risk sequence. “What matters most in retirement is selling assets for income,” says Wade Pfau, professor of retirement income at the American College of Financial Services in King of Prussia, Pennsylvania. “You have to sell more stocks to get the same amount of money. Those stocks then disappeared, so even if the market bounces back, your portfolio won’t recover as much.

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