Sequence of return risk, nurses and retirement!
As you get closer to retirement after maybe having been part of a nursing career for 30 plus years there are many important factors to look at in regards to your financial plan.
Things like asset allocation, social security decisions, and pension distribution decisions are all areas where decisions have to be made.
But there is a very important financial topic that not many advisers discuss and that is the risk of sequence of returns.
This sequence of return phenomenon becomes evidently important when you enter your retirement years but it is something that is important to look at and understand years before retirement is even on your radar.
So let’s take a look at how the sequence of your investment returns can play a huge factor when you are in retirement and taking income from your various portfolios.
If we assume someone is pulling income from their account and during the first years of retirement they have positive market returns they may be just fine throughout their retirement.
If on the other hand the first years in retirement gave this individual negative market returns they might end up in a situation with a lot less money.
Two nurses who have the same amount of money saved up, take the same amount of withdrawals annually and achieve the same average rate of return inside their portfolio could end up with very different results.
The one who gets better rates early on will most likely be in much better shape than the individual who had bad market returns early on and as the following link will show the difference can be very significant.
There are ways to prepare yourself from becoming the person running out of money due to an unlucky sequence.
The most important aspect that can help eliminate this risk is to have money saved up that is non-correlated to the stock market and thereby also not correlated to your other portfolios.
On top of that there are ways to generate steady monthly income through various financial products. As always we are here to help guide you through your financial decisions
Written by CreativeNurse Team