1. Withdrawing big early in retirement No wonder many people fail to minimize the following five key risks of retirement:
There’s a natural tendency to want to spend liberally early in retirement, when your health is better and your interests and hobbies more varied. But taking a large withdrawal from stock-focused investment accounts can be hazardous if the market plunges soon thereafter.
Visualize the damage wrought in a tough year like 2008, when large stocks tumbled 37% on average. To recover from a plunge of that size, your portfolio would need to rebound by 60%. If you also had withdrawn, say, another 10% to splurge on vacations or a new car, it would have been harder to make up the lost ground. “You have less time to make a comeback, especially when you are starting to withdraw from those accounts,” said Jim Braun, president of Tri-State Retirement in a commentary.
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- These are the top 5 risks of running out of money in retirement
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