"A major market downturn doesn't necessarily mean a 50% drop. Even a decline of 20% or 25% can do meaningful damage to a retirement portfolio, which is why it's important to plan for that possibility in advance."
"Having an extremely stock-heavy portfolio in retirement can be risky, especially if you may need to withdraw money during a downturn. If you're forced to sell stocks at a loss to cover living expenses, that can hurt your portfolio's long-term sustainability."
"One common approach is to gradually reduce stock exposure as retirement approaches so that your portfolio includes a larger share of bonds and cash by the time you begin taking withdrawals."
Investing in the stock market carries inherent risks, particularly for retirees relying on savings for income. A market decline, even of 20% or 25%, can severely affect retirement portfolios. To protect against this, retirees should consider a balanced mix of stocks, bonds, and cash. Gradually reducing stock exposure as retirement approaches allows for drawing from lower-volatility assets during downturns, thus preserving long-term portfolio sustainability. Bonds can provide stability, as they often do not move in the same direction as stocks.
Read at 24/7 Wall St.
Unable to calculate read time
Collection
[
|
...
]