DURHAM, NC / ACCESSWIRE / July 25, 2022 / The volatility of today's stock market has led many investors to pull money out of their investment portfolios at exactly the wrong time. Whether in the misguided belief that they should try and minimize their investment losses or for the practical reason of needing cash to live on, recent retirees who follow either path may set themselves up for retirement failure.

While a declining investment portfolio is a concern for all retirees, it is especially problematic for recent retirees. The challenge centers around sequence of return risk, or the impact of negative investment returns in the early years of a withdrawal period.

As Jim Tucker of Tucker Bria Wealth Strategies explains, "When the market is going down and you're recently retired, withdrawals from your retirement savings creates a negative headwind right out of the gate. These withdrawals, coupled with investment losses create a scenario that your nest egg may not be sufficient to get you through retirement."

Tucker continues, "The same starting point coupled with early investment gains, often puts a recent retiree on solid footing to meet their retirement objectives and not run out of money."

The sequence of investment returns early in the retirement account withdrawal period often plays a large role in meeting a retiree's spending plan objectives. Navigating this challenge is critical for the retirement success of individuals who retire in 2022.

Experienced in market fluctuations as well as a keen observer of historical trends, Tucker draws connections between the events of today and other market declines such as the dot com bubble of 2000 and the financial meltdown of 2008. Learning from these periods, Tucker understands that recent retirees need to be aware of how sequence of return risk impacts their retirement savings, not only during the current market decline but also throughout their retirement. Tucker Bria Wealth Strategies is positioned to implement strategies for its clients to reduce this impact.

"With many of my clients, we were raising cash in 2021 for an inevitable downturn in the market," Tucker says. "If you didn't raise cash, then the next best strategy is often looking for investments that have not gone down but have gone sideways. This can be tricky now because of rising interest rates that are creating stock-like negative returns in investor's bond investments."

Many investors did not prepare for a downturn, keeping their foot on the gas as the market soared through 2021. Now, they are faced with a predicament: Without cash reserves and lacking the usual safeguards of fixed income investments what should they do?

For retirees who have the right distribution strategy, they will be able to weather the next 12-18 months by using their winning investments for their cash needs. As Tucker reminds his clients, even when your investments are showing a loss, you have not yet lost anything - yet.

"The only time you lose money in the market is when you actually sell something at a loss and then you take the money out of your account," Tucker says. "The challenge for new retirees is that now they need to take money out of what they ideally expect to be a 25-30 year retirement horizon. And selling now turns an unrealized loss into a realized loss early in their withdrawal period."

Tucker states, "If this were the dot com bust of 2000 but you retired in 1990 and had 10 years of your account going up, there is less to worry about. A similar scenario occurred over the 10 years leading up to 2022. A 2012 retiree is in a different position than a 2022 retiree because of early positive investment returns."

If you need to sell an investment to raise cash, Tucker says, the strategy may be to sell your winners.

"My approach is that you sell your winners, or relative winners who have lost less, not your recent big losers," Tucker says. "The reason is that often there is a significant snapback when the market turns for the investments that have really taken a hit during a downturn. As long as you have faith in the big loser, selling a winner, or a smaller loser, may be the better option."

By raising cash from better performing investments, retirees can minimize the impact of making withdrawals from their investment accounts. Selling off investments at a significant loss will only compound the problem - leading to a situation that imperils their retirement.

"It's basically a math problem. If you have negative investment returns in the first 3-5 years of retirement as you are beginning to spend your savings, you may never catch up. So, you want to keep your negative return as low as possible" Tucker says. "This is why I often recommend selling your relative winners during down markets."

With thousands of people entering retirement every month, navigating the economic downturn can be stressful and frustrating. Tucker Bria Wealth Strategies can help new retirees set themselves on the path to financial success - even during difficult times.

"Unless you plan to delay your retirement, you have to face this," Tucker says. "But you should be able to navigate it with the right distribution strategy. The correct distribution strategy now will give you a better chance of achieving your goals throughout your retirement"

Jim Tucker, CFP®, CRPS® is a financial advisor located at 3100 Tower Blvd, Suite 117, Durham, NC 27707. He offers securities and advisory services as a Registered Representative and Investment Adviser Representative of Commonwealth Financial Network^®, Member FINRA/SIPC, a Registered Investment Adviser. Jim can be reached at 919-381-5780 or at jim.tucker@tuckerbria.com. To learn more about Tucker Bria Wealth Strategies, visit www.tuckerbria.com.

Company Name: Tucker Bria Wealth Strategies
Contact Person: Jim Tucker
Address: 3100 Tower Blvd, STE 117, Durham, NC 27707
Phone Number: 919-381-5780
Website Link:
http://www.tuckerbria.com
Send email

SOURCE: Tucker Bria Wealth Strategies