The Principal Financial Group has just published a whitepaper online that gives guidelines for possible actions and alternative strategies that may help generate and sustain retirement income before and after market downturns.
Author Noelle Fox explains that, “The year 2008 tested the mettle of even the most risk-tolerant investor. It is estimated that investors experienced $10 trillion in market value decline. For investors nearing or entering retirement, the market decline may prompt questions about how sustainable their retirement income may be in light of lower asset values.”
The paper explores the sequence of returns risk, or the risk of poor returns reducing savings early in retirement versus poor returns later in retirement, and illustrates how recent market volatility has made this risk more visible than ever.
Next, it shows that investors who wait longer to retire can generally absorb more market declines — although ongoing monitoring of retirement savings is critical for most retirees.