The theme this week on the Retirement Quick Tips Podcast is: Top Challenges Retirees Face In 2023

Today, I’m talking about another unique challenge that retirees and those of you who are within a couple of years of retirement face heading into 2023 - portfolio declines

• Not just stock market, bond market too
• Even conservative investors have been pummeled in 2022, and as I’ve talked about before on the podcast, until the Fed stops raising interest rates, it’s unlikely to get much better in both the stock and bond markets
• Risk is greater if you’re in your early years of retirement because of sequence of returns risk 
• Essentially it’s just bad timing with retiring around the same time that a downturn in your investments happens. It doesn’t sound so bad, but it can be catastrophic.
• According to an article in Forbes published in 2019, “One of the biggest risks for retirees who want to generate their retirement income from a volatile investment portfolio is large negative returns early in retirement. We often call this sequence of returns risk. When you withdraw money from an investment portfolio, negative returns early in retirement can cause the portfolio to fail faster than if those same negative returns instead occurred later in retirement.” 
• In other words, your portfolio withdrawals in those early years combined with a large drop in the value of the portfolio, permanently reduce the size of your nest egg and it’s really difficult to recover. 
• The key with managing bad timing and your portfolio taking a hit in the first couple of years of retirement is to remain flexible. If you can keep working and delay retirement, work part-time in order to stop withdrawals - even if you just did this for 6-18 months - it can mean the difference between a secure retirement and one where you run the risk of running out of money. 

That’s it for today. Thanks for listening! My name is Ashley Micciche and this is the Retirement Quick Tips podcast.  

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Tags: retirement, investing, money, finance, financial planning, retirement planning, saving money, personal finance