What Happens to Your Retirement Paycheck When the Market Falls?

While you’re working, a market decline can be uncomfortable. In retirement, it can be something more—the money that’s falling may also be the money you’re depending on to fund your lifestyle.

That creates a challenge many retirees overlook.

If your retirement paycheck depends heavily on selling investments, what happens when the market drops 20%, 30%, or more? You may be forced to sell investments while they’re down, leaving fewer dollars invested to participate when the market eventually recovers.

That’s why retirement income planning should involve more than simply deciding how much you can withdraw from your portfolio.

I believe a good retirement income strategy should consider three different characteristics of income:

• Predictable income — income less dependent on what the stock market is doing.
• Rising income — income with the ability to help keep pace with increasing costs.
• Lifetime income — income you know can continue for as long as you live.

The goal isn't necessarily to make every dollar of retirement income predictable or guaranteed. It's to determine the right mix for your particular lifestyle, resources, and comfort level.

You spent decades accumulating your retirement savings. Once you retire, the job changes.

The question is no longer simply, “How should my money be invested?”

It becomes, “How will my money reliably support the life I want to live?”