If you are retired or retiring soon, you probably have different financial needs than you did when you were younger, and will soon need to replace your wages. If you’re counting on your investments to do that for you, I believe your number one job is to protect your principal. After all, if you lose half your money in the next bear market, you probably won’t be able to live the retirement lifestyle you want.
The stock market is making history—and not the good kind. As of this writing, it looks as if the market will have its worst December since the Great Depression. This news could be even worse than it appears: The last three months are usually the strongest of the year—instead it appears that the S&P will end 2018 with a loss of 5.6%.
The market could rally, and I would not be surprised to see it do so for a short period of time.
I once spoke with a pilot who had worked for Delta Airlines. He’d felt good about his retirement for most of his working life: after all, he was expecting to receive about $120,000 a year from his pension. Then Delta went bankrupt. He did eventually end up with a pension, but it ultimately paid around $36,000. That may seem like a good pension, but not to someone who built his retirement plan based on $120,000 a year.
Losing a spouse is a traumatic, emotional experience, but sadly, it’s one that married couples need to plan for. And unfortunately, there are financial implications in addition to the emotional impact—and according to a survey by the Society of Actuaries, most people do not comprehend the financial magnitude of such a loss.
A spouse’s death always means a reduction in Social Security benefits, as only the larger of the two benefits will be paid out to the surviving spouse.
You’ve probably decided when you’d like to retire. Maybe you plan to work until you’re 65 so you can build up your retirement nest egg. But what would happen if your job was outsourced, or your employer closed down your branch, or your company “needed to cut costs,” and you were out of a job when you were just 61? Could you find a level of employment comparable to your old job? If you could,