Planning for a Successful Retirement

Thanks to the realities of longer life expectancy, rising health care costs and inflation, your retirement savings will have to last longer and work harder than ever before. In fact, you may need 85% of your pre-retirement income to maintain your lifestyle in retirement.1

Yet, regardless of your level of investment expertise, sooner or later everyone will face a market loss—and depending on where you are in your retirement timeline, portfolio losses may have greater impact.

 

Recovering from Market Declines

The charts below illustrate what it takes to make up for portfolio losses before and during retirement.

 

Getting Even

The first chart shows the total return needed to “catch up” from various levels of portfolio losses if there are no withdrawals from the portfolio.

 

Investor Education - Retirement Realities - Getting Even chart

Calculations by Retirementoptimizer.com Inc. All figures are rounded to one decimal place. Past performance is no guarantee of future results. The charts above are for illustrative purposes only and do not represent a specific investment.

The Distribution Challenge

During the distribution phase, each dollar of withdrawal compounds its own loss, which must then be recovered by the remaining assets in the portfolio. In addition, withdrawals typically increase over time to counter the effects of inflation, making it more difficult to recover fully from a market decline.

 

Investor Education - Retirement Realities - The Distribution Challenge chart

Calculations by Retirementoptimizer.com Inc. All figures are rounded to one decimal place. Past performance is no guarantee of future results. The charts above are for illustrative purposes only and do not represent a specific investment.

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Asset Class

Investing Principles

Investment Products & Strategies

Responding to Today's Retirement Realities

Experiencing market losses is an inevitable part of the investing experience. Depending on where you are in your retirement timeline, portfolio losses may have greater impact. Be sure to consider these realities when determining your savings strategy to help achieve your retirement income goals.

 

1 Aon Hewitt, 2012 Retirement Income Adequacy at Large Companies: The Real Deal.

2 Initial withdrawal rate is the annual withdrawal rate as a percentage of the initial portfolio value at the start of retirement. Figures in this table are based on an annual 3% increase of the dollar amount of withdrawals; the purpose of the increase is to maintain the purchasing power.

 


Your financial advisor can help you develop a long-term investment plan with a balance of strategies that addresses your need for portfolio growth, income, capital preservation and risk management.

 

 

 1 Source: Legg Mason.

All investments involve risk, including possible loss of principal. Past performance is no guarantee of future results. Indexes are unmanaged, and not available for direct investment. Index returns do not include fees or sales charges.

Equity investments generally provide an opportunity for more capital appreciation than fixed income investments, but they are subject to greater market fluctuations.

Diversification does not assure a profit or protect against market loss.

Any information, statement or opinion set forth herein is general in nature, is not directed to or based on the financial situation or needs of any particular investor, and does not constitute, and should not be construed as, investment advice, forecast of future events, a guarantee of future results, or a recommendation with respect to any particular security or investment strategy or type of retirement account. Investors seeking financial advice regarding the appropriateness of investing in any securities or investment strategies should consult their financial professional.