Did you know that a 50% loss requires a 100% gain to get back to where you started? A long climb out of the Black Hole only means you’re back to where you started. Over the “long-term” you’ve got a good chance of doing well in the “market”, but shorter term there there may be more risk than you realize. If your money is needed near-term, or if you’ve barely enough to pay for a long retirement, be cautious because there are both bear and bull markets. How can the “market” have a bearing on your retirement?

If the money you’ve saved, including your 401(k) or comparable employer-sponsored pension plan, will be your sole source of support for retirement, you can’t afford to gamble. Your investments will be your income from now on through “old age”. See, it used to be that people worked until age 65 and they were dead by age 72. It didn’t matter, you couldn’t screw it up. Just invest in CD’s because inflation didn’t matter. By the way, “old age” is not what it used to be because medical advances have increased expected life spans substantially. In fact, if you and your spouse are both age 65, there is about a 50% probability that one of you will live to age 90 and a 25% chance at least one of you will reach age 95. This means the cost of your retirement will be greater – not only because you live longer, but with advancing age comes the likelihood you’ll need additional money for medical care, which increases much greater than the CPI (consumer price index). What happens if you retire and it’s 2000,2001 and 2002 all over again? What if you no longer have an income from working and the market crashes? What happens if you live to age 95 rather than 83, and you need to pay someone to help you?

In some corner of your mind, no matter how much money you’ve got, you probably imagined something going very wrong financially. It could be an expensive emergency like a major health problem, an uninsured loss or a market crash that makes 2000-2002 look like a minor blip. You’ve realized your greatest fear: your money dies before you do! While you may never experience a major financial interruption, understand that the market gains are presumed, not guaranteed. History tells us that gains don’t always arrive on schedule, and there can be long periods of declining prices.

Be aware that you have left Accumulation Land and will now be residing in Distribution Land. The tools, techniques and investment solutions required in Distribution Land may be very different than those that you used or even considered in Accumulation Land. In fact, continuing to use those old strategies may actually accelerate your demise. During the withdrawal years, there is less room for error than in the accumulation years when you can scrimp to save more, postpone retirement a few more years or wait for the market to recover. If you retired in 1968, you would have unknowingly entered a 14-year period when the market did not gain the presumed 10% yearly but, point to point, gained nothing. This stagnant 14-year period represents about 50% of your retirement.

If your retirement plan uses the customary assumption of an 8% to 10% annual investment gain over the long-term, make sure you have enough time for the long-term. In fact, simply assuming ANY linear rate of return may spell disaster, because the market doesn’t rise and fall in a linear fashion. Let’s say that you assumed a 10% rate of return on your investments along with a 6% withdrawal rate. You unfortunately retired at the beginning of the last Bear Market and lost about 43% of your portfolio in 3 years. In addition to that you withdrew 18% for income over those three years.Guess what? You aren’t recovering! Constant withdrawals mean that if the returns you’ve assumed do not arrive on schedule, your greatest fear could become a reality.

So what’s the answer? Your intuition tells you to “go it alone”, but logic points in another direction: getting professional help. Help to space your investment maturities so your money is working hard but available when needed for retirement – including sufficient liquidity for emergencies. Help to avoid investment risk that can lead to devastating results. Help to advise you about the pros and cons of the numerous new options that have become available in response to a growing retirement population: lifecycle mutual funds, fixed annuities with guaranteed lifetime income benefits, when to start Social Security and how to integrate the benefits with your retirement money to save taxes, using the Roth or stretch IRA, and how to insulate your earnings from income taxes until the money is withdrawn for use. Therefore your new adviser in Distribution Land may need to be completely different than the one that you used in Accumulation Land.You can’t start planning too early, and it’s never too late to reassess your retirement investments.

To learn about how you can obtain additional information on our own unique WealthCare Process, visit our website at www.familywealth.info or call 1-877-507-9770.