Accumulation and looking for high rates of return should no longer be the focus, preservation of account balances and returns that outpace inflation become the priority.
During the accumulation phase constant contributions to retirement accounts allowed investors to benefit from dollar cost averaging. As the market fluctuated investments were purchased at various prices. In down markets investments were purchased cheaply and in up markets investment purchases were more expensive. The average purchase price is in between the ups and downs of the market and growth is possible do to the long term nature of investing for retirement.
Just before retirement the long term nature of the investments disappears and at least a portion of the retirement assets becomes short term invests that will be sold for income in the near future. Avoiding a market down turn at this point becomes critical since a reduction in your retirement account at this point may cause a delay in retiring altogether since there may not be enough funds in the account to retire comfortably or as initially planned. This did happen to many perspective retirees’ in the financial crisis of 2008. Also as selling investments for income becomes a requirement not an option a down market requires a retiree to sell their investments cheaply thus reducing their account values and making it difficult to recover account values since no new money is being contributed. The retirees future financial security is at the whim of the markets and their investment timeline is now short-term vs. long-term.
Preserving ones retirement nest egg is critical approaching retirement. Piece of mind and security are more important than higher rates of return. Investments that guarantee or seriously limit loss with the possibility of outpacing inflation become the ideal investment for any retiree. This allows the retiree to have a much clear picture of how long their nest egg will last and what type of retirement the retiree can afford.
For more information visit Brian Livesay’s Who Is Page here in the Journal
Or see the article in Small Business Trendsetters
Or the article in CNN iReport “Retirement Accounts and Taxation – The Choice Is Pay Now or Pay Later”
Brian Livesay The Retirement Guardian
You may contact him at his office
Livesay Capital Solutions Inc.
1761 Hotel Circle S. Ste 360
San Diego, CA 92108
Call at 866-726-0725 / 619-281-8377
Or visit his Web Site www.retireestaxgroup.com