How long will your retirement nest egg last?

Watch how a bear market can significantly impact your retirement withdrawal strategies.

Isabel Barrow, Director, Financial Planning

Prepare Your Retirement for Different Market Conditions

Do you know what the market environment will be like early in your retirement? Consider a financial plan that helps provide retirement income through both bull and bear markets.

sequence of Returns risk in retirement

Retirement Chart Retirement Chart

Having to draw income from your investments during a bear market early in your retirement can damage your nest egg, as demonstrated by the orange line. The right financial plan can prepare for alternative income sources during these periods.

SOURCE: Edelman Financial Engines. This is a hypothetical illustration used to demonstrate the impacts of bull and bear markets on retirement assets either in the early years or later years of retirement, respectively, as withdrawals are taking place. Each scenario assumes a starting value of $1 million, annual withdrawals of $40,000, the same set of annual returns over a 30-year period, only in inverse order or "sequence." The orange line represents a sequence of returns that includes a bear market in its early years. The green line represents a sequence of returns that includes a bull market in its early years. Hypothetical performance of each line assumes a 6.7% average annual return over the full period. The chart is for illustrative purposes only and is not intended to predict investment results. They do not include consideration of the investment fees or expenses, time value of money, inflation, fluctuations in principal or taxes.

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