What if you retire at a Market Peak?

November 20, 2018

One concern investors have is retiring at or just after a market peak and whether their portfolio’s can sustain withdrawals for their lifetimes.

There have been 4 significant periods in the last 100 years when equity markets took more than 24 months to recover.  Ben Carlson, author of the Common Sense Blog ran the numbers and concluded that a thoughtfully managed portfolio provided the investor with sufficient income and a legacy even through some of the longest stock market decline and recovery periods.

Income planning for investors is an annual process which takes into account needs, investment returns, taxation and often credit strategies to work well – good planning and regular reviews  makesour clients long term cash flow planning work.

“The Fed last week released its 2Q18 estimates for household net worth and related measures of prosperity. Of note, households’ leverage (liabilities as a % of total assets) fell to a 33-year low, and households’ net worth hit a new all-time high in nominal, real and per capita terms.

Total household net worth is now almost $107 trillion, up over 50% from pre-2008 highs, whereas liabilities are up only 7% from their Great Recession highs. Housing values have increased by about 15% since their 2006 bubble highs, but are still 6% lower in real terms. Households have been busy deleveraging, saving and investing, and the housing market is back on its feet and healthy. Major trends are all virtuous and consistent with past experience.”

Scott Grannis,
“More impressive financial milestones,”
September 27