{"id":2851,"date":"2022-08-29T15:45:14","date_gmt":"2022-08-29T19:45:14","guid":{"rendered":"https:\/\/www.thewealthguardians.com\/staging\/3023\/?p=2851"},"modified":"2022-08-29T15:46:29","modified_gmt":"2022-08-29T19:46:29","slug":"how-1-can-make-a-big-difference-when-retired","status":"publish","type":"post","link":"https:\/\/www.thewealthguardians.com\/staging\/3023\/how-1-can-make-a-big-difference-when-retired\/","title":{"rendered":"How 1% Can Make a Big Difference When Retired"},"content":{"rendered":"

<\/p>\"\"Be very careful when making even small changes to your assumptions<\/em>\n

Cut a pie into 100 slices and what do you have? Barely a nibble. Seemingly an inconsequential share of anything, 1% can actually make a tremendous difference to your financial security. Even fractions of a percent added to investment returns over time can redefine your life in retirement or your net worth.<\/p>\n

For instance, if you can increase your average annual investment return from 5% to 6%, that bump represents a fifth better return \u2013 and a substantial increase in your options for living.<\/p>\n

The Difference 1% Makes<\/strong><\/p>\n

Let\u2019s assume that you saved well over your career. You\u2019re 65 now and, in addition to your Social Security benefits, you have $500,000 that may need to last 30 years. A 5% average annual return \u2013 reduced 2.5 percentage points for projected inflation (yes inflation is much higher today, but let\u2019s use a more historical rate for inflation) \u2013 allows you to withdraw $1,750 pre-tax each month and enjoy, considering average longevity, an excellent probability of not running out of money for the rest of your life.<\/p>\n

Increase your average annual return to 6% (make it 3.5% after inflation) and you can increase monthly withdrawals to $2,000 while maintaining significant probability of stretching your nest egg to age 95.<\/p>\n

Sounds great \u2013 except that adding a percentage point to your expected returns without accounting for more fluctuation in your investment outcomes is hard given today\u2019s low yields for bonds.<\/p>\n

For the past 30 years, many people lived well in retirement off bond-heavy portfolios. As interest rates trended down for a generation, bond returns were adequate to exceptional.<\/p>\n

The Golden Age of Bonds is Probably Dead<\/strong><\/p>\n

We have probably left the golden age of bonds. Now global interest rates are near all-time lows and investors find bond returns inadequate to generate enough retirement income.<\/p>\n

Bonds saw multiple decades of weak returns years ago, but most retirees then had both shorter life expectancies and company pensions instead of an investment account. Retirees saw far less reason to squeeze a little more return out of money.<\/p>\n

With low bond income, many investors feel compelled to seek more investment return via more money in the stock market or high-yield junk bonds that may deliver better returns and higher income only in exchange for more uncertainly and volatility. Risk of bond issuers\u2019 default, aka credit risk, is tame right up until it isn\u2019t \u2013 sometimes also the moment that some investors ignore issuers\u2019 questionable credit quality while scrambling for that extra point.<\/p>\n

Your Written Investment Policy<\/strong><\/p>\n

So how can you walk that narrow cliff trail between risk and earning slightly more? First, focus on what you can control. Though this task obviously doesn\u2019t include investment outcomes, you can learn much more about your exposure to risk, reasonably expected returns and how both match your goals.<\/p>\n

A written investment policy (aka an investment policy statement) tied to your financial plan can add a guardrail to that cliff edge, minimizing your emotional and knee-jerk decisions when the market turns temporarily sour.<\/p>\n

In today\u2019s uncertain economy, it is more important than ever to have a clear understanding of the risks associated with your current investment portfolio and to be proactive in protecting your hard-earned money. Our free portfolio risk analysis provides you with the information you need to make informed decisions about the future of your retirement savings.<\/p>\n

With our cutting-edge software, we can help you create your Custom Retirement Paycheck Plan<\/strong><\/em><\/span><\/a> that balances risk and growth while minimizing taxes and protecting your assets from market downturns. So don\u2019t wait \u2013 get your plan today!<\/p>\n

Our Custom Retirement Paycheck Plan<\/strong><\/em><\/span><\/a> shows how to protect your retirement from the risks of unexpected market swings, tax changes, and health care expenses using a mathematically tested strategy to create lifetime income allowing you to stop worrying about outliving your money and get on with enjoying the rest of your life.<\/p>\n

\"\"<\/a><\/p>\n

\n

>Click here to learn more<\/em><\/strong><\/span><\/a><\/p>\n<\/blockquote>\n

Give us a call at our Charlotte office at (704) 248-8549, or our Clemmons office at (336) 391-3409. Or, click here to request a no-cost, no-obligation meeting<\/strong><\/em><\/span><\/a>.<\/p>\n

\n

[SOURCES & ADDITIONAL DISCLOSURES]<\/strong><\/p>\n

Copyright \u00a9 2022 FMeX. All rights reserved. Distributed by Financial Media Exchange.<\/p>\n<\/body>","protected":false},"excerpt":{"rendered":"

Be very careful when making even small changes to your assumptions Cut a pie into 100 slices and what do you have? Barely a nibble. 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