Savings and Spending Possibilities for Retirements Beginning Today

An ongoing theme in my research about retirement income planning is just how big of an effect that sequence of returns risk has for both pre-retirees and post retirees. We are really vulnerable to the sequence of market returns experienced in the years in which we are saving for retirement, as well as the years in which we are retired. Though it is common to look at illustrations about retirement planning using an average market return that might be appropriate over a long time horizon like 30 or 40 years, the reality is that it is a much shorter period of returns that has a disproportionate impact on our overall retirement outcomes. And for these shorter periods, actual outcomes will surely differ quite materially from the expected average. We have no control over the returns that the market will provide in these pivotal years.