Here Are Three Ways to Protect Your Retirement Fund from a Downturn

It’s normal to feel uneasy about retiring when the economy could be in a downturn, but there are methods to keep your current standard of living in retirement even if the economy takes a downturn. Inflation is at 40-year highs, interest rates are rapidly rising, and equities have had their worst first half since the 1920s, so investors are understandably nervous. From that viewpoint, let’s take a look at three of the most efficient strategies to sustain your nest egg in retirement and prevent the danger of ever running out of money.

Look into Certain Annuities

If your retirement income is not certain, either via a pension or significant Social Security payments, a single-premium annuity might be a wise investment. If you want to spend retirement living well on a fixed income, you may want to consider annuitizing a part of your stock portfolio.

Some annuities cost too much, while others have too many extra costs or confuse riders. A retiree whose portfolio consists only of equities and bonds may be persuaded to forego annuities after reading this. If you are concerned about market volatility over the next decade or about longevity risk, however, single-premium annuities may make sense to allay the risk of outliving your money in retirement.

Pick Up a Part-time Job

Even tiny sums of income in retirement — or the years leading up to it — may make a tremendous impact on the degree to which you need to depend on unpredictable assets. Part-time employment may offer income levels in the $10,000 to $20,000 area, which, when paired with Social Security, can go a very long way in relieving the burden on your portfolio.

To use an extreme example, let’s say you can supplement your $30,000 in yearly Social Security income with an additional $20,000 from part-time work. In addition, let’s say you estimate your first year of retirement would need an annual budget of $70,000.

If you were to opt out of part-time employment, the 4 percent guideline for a 30-year retirement would imply a personal savings target of $1,000,000 ($40,000 divided by 4 percent). If you work part-time after retirement, you may cut your portfolio withdrawal need in half, allowing you to live comfortably on half as much money.

Needless to say, little sums of earned revenue count more than they would look.

Delay applying for the Social Security benefits

Delayed Social Security credits are a particularly effective tool for anyone who can afford to wait on filing. Social Security payments increase by 8 percent annually for each year you delay filing for them. In addition, you will get yearly inflation adjustments (sometimes known as cost-of-living adjustments or COLAs) to help offset the impact of inflation on your spending power. This will be helpful if the present inflationary situation lasts longer than expected.

Social Security, for many seniors, operates as a minimum amount of guaranteed income meant to cover basic living expenditures. Investment returns from stocks are volatile, while Social Security is guaranteed for life. The longer you wait to file, the more you’ll finally get, and the less you’ll need to depend on your investment portfolio to fulfill spending demands.

Considering the Next Ten Years

The most a retiree can do is make an educated guess about how things will play out and then prepare accordingly. Rather than depending on just a few sure bets when developing your financial plan for the next ten years, it is in your best interest to take into consideration a variety of potential economic outcomes. Doing so will allow you to achieve far better results. It is a hazardous gamble not to anticipate a decade of outperformance in the economy, but it is not a risky play to anticipate a time of catastrophic economic devastation. Keep a level head and put your attention on improving the factors that are within your direct control.

Contact Information:
Email: [email protected]
Phone: 9568933225

Bio:
Rick Viader is a Federal Retirement Consultant that uses proven strategies to help federal employees achieve their financial goals and make sure they receive all the benefits they worked so hard to achieve.

In helping federal employees, Rick has seen the need to offer retirement plan coaching where Human Resources departments either could not or were not able to assist. For almost 14 years, Rick has specialized in using federal government benefits and retirement systems to maximize retirement incomes.

His goals are to guide federal employees to achieve their financial goals while maximizing their retirement incomes.