Managing return expectations throughout retirement is essential to understanding your financial position. We believe the rate of return assumption should be somewhere between 5 and 7%. During your earning years, where your portfolio can withstand more volatility, a 7% return is a realistic expectation. Subsequently, your return expectations throughout retirement should be on the lower end, around 5%.
We consider this a safe projection because most retirees are not able to withstand the extreme volatility that comes along with a high risk/high return portfolio that is comprised entirely of stocks. History has proven this estimation to be true, with returns for the S&P 500 staying between 5-8% for the last 30 years.
Black Swan Events
Major events like the housing market crash of 2008 and more recently, the global pandemic, have impacted return expectations for investors. Life is not linear, and neither are portfolios. Throughout the lifetime of any retiree, they should expect to see pullbacks in the market, so setting realistic expectations and planning for unforeseen events will provide security and a sense of financial freedom.
Retirement Planning Resources
While there are a vast number of tools and internet resources dedicated to retirement planning, these tools often fail to account for all the variables in play. Seeking out the wisdom and guidance of a financial advisor helps eliminate the likelihood of unrealistic forecasting and provides you with a roadmap for withdrawal strategies. Knowing when and from where to withdraw has become increasingly complex, so managing these decisions can be overwhelming. Our purpose at Wiser Wealth Management is to help our clients achieve their financial goals by providing them with a balanced portfolio that takes all these variables into account – making life simpler.
Wiser Wealth Management, Inc (“Wiser Wealth”) is a registered investment advisor with the U.S. Securities and Exchange Commission (SEC). As a registered investment advisor, Wiser Wealth and its employees are subject to various rules, filings, and requirements. You can visit the SEC’s website here to obtain further information on our firm or investment advisor’s registration.
Wiser Wealth’s website provides general information regarding our business along with access to additional investment related information, various financial calculators, and external / third party links. Material presented on this website is believed to be from reliable sources and is meant for informational purposes only. Wiser Wealth does not endorse or accept responsibility for the content of any third-party website and is not affiliated with any third-party website or social media page. Wiser Wealth does not expressly or implicitly adopt or endorse any of the expressions, opinions or content posted by third party websites or on social media pages. While Wiser Wealth uses reasonable efforts to obtain information from sources it believes to be reliable, we make no representation that the information or opinions contained in our publications are accurate, reliable, or complete.
To the extent that you utilize any financial calculators or links in our website, you acknowledge and understand that the information provided to you should not be construed as personal investment advice from Wiser Wealth or any of its investment professionals. Advice provided by Wiser Wealth is given only within the context of our contractual agreement with the client. Wiser Wealth does not offer legal, accounting or tax advice. Consult your own attorney, accountant, and other professionals for these services.
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