Time in the market is a luxury retirees often can’t afford

It’s an old and popular investment adage – time in the market beats timing the market. But as our co-chief investment officer Chad Padowitz warns, that’s not always applicable for retirees no longer earning a wage. In fact, sharp market downturns can play havoc with those in retirement who must draw down on their savings and have less capacity and time to wait for their investment portfolios to recover.

“Investors brave enough to ride out the fluctuations, like those we’ve seen with the global market sell-offs this month, can benefit from the general upward trend of equity markets.”

But this approach does not necessarily work for retirees drawing down on their savings and having less ability and time to wait for the market to recover. If savings are suddenly worth less during retirement, they generate less return. This can force the sale of investments at a loss and result in fewer assets to draw on in the future.

Chad says this situation exposes retirees to sequencing risk, a problem created when the order and timing of returns clash with the need to regularly draw money out of a portfolio.

Read the full article in The Golden Times