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Retiring Into Uncertainty - Beyond COVID-19

Warren Arnold, Patty Park, Kenneth Little, July 20, 2020


Anyone nearing retirement, or who is already retired, will be concerned about how they achieve their post-work ambitions when a global pandemic is hammering economies and affecting financial markets. The authors of this article consider approaches people should take.

Test your comfort level with your “safety net”.
A key feature of your wealth plan to examine, especially in times of market volatility, is how much (in terms of annual lifestyle spending) you have set aside in your Portfolio Reserve, in safe assets. Your Portfolio Reserve is an expression of your risk tolerance. This figure is particularly important as this is what you will be using to fund your retirement lifestyle in a down market, rather than other parts of your portfolio. This is the cushion that will enable you to weather the storm. Make sure you understand and feel comfortable with that amount. There is no right answer. It varies for everybody.  

Consider your alternatives.
When you look at retirement projections during times of market volatility, the result may not look too appealing. If this is your situation, change key variables in your retirement plan and note their impact on the outcome in order to generate choices.

Delaying your retirement by a few years (if you can) may be the lever that changes your projected result from failure to success. Working a little longer, even if it is in a part-time capacity, or in a less lucrative job or industry, creates two positive benefits. First, you are not actively withdrawing from your portfolio for a couple of years. Secondly, you are adding to your investment accounts and allowing them more time to grow. Combining these two actions, if for only a few years, can have a material impact on the projected results of your retirement plan.  

Spending less in retirement is another option to consider. Spending is a key driver in the success of a retirement plan. If you have some flexibility in your spending, especially if it is in the crucial first several years of retirement, that may be enough of a difference to change the trajectory of your projection.

Understandably, retirement is a complicated life transition. There are many choices and options available. Knowing what they are and how they would potentially affect your retirement projection is essential in crafting a retirement plan that works for you and your family. Make sure that you collaborate with your wealth management team to create a plan that meets your needs and sets you on a path for achieving your most important financial goals. A well-defined retirement plan will provide a clear source of direction. Having that source of direction will enable you to retire with more confidence.


1, 2020 Consumer Financial Protection Bureau: Retirement Security and Financial Decision-Making Research
2, 2019 Fidelity Retiree Health Care Cost Estimate
3, 2019 Genworth Cost Of Care Survey

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