There's a 'danger zone' for retirees when the stock market dips. How to shield your portfolio.
Stock market dips can create a big portfolio risk during your earlier retirement years — and many investors don’t prepare, financial experts say.
Stock market dips can create a big portfolio risk during your earlier retirement years — and many investors don’t prepare, financial experts say.
The issue, known as “sequence of returns risk,” refers to how the timing of withdrawals paired with stock market losses can impact how long your retirement saving lasts.
Your first five years of retirement are the “danger zone” for tapping accounts during a downturn, according to Amy Arnott, a portfolio strategist with Morningstar Research Services.
If you take assets from accounts when the value is falling, “there’s less money left in the portfolio to benefit from an eventual rebound in the market,” she said.
Moreover, sequence risk can increase your chances of outliving retirement savings, Arnott said.
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