2169 East Rutland Lane, Martinsville, IN 46151
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No doubt about it – when it comes to living off your retirement savings, the “big bad wolf” is called Sequence of Returns. Now, you’re no stranger to the stock and bond markets – after all, you’ve been putting money into your investment portfolio for as long as you can remember. But now, you realize, the time has come to begin systematically withdrawing funds from your investments in order to supplement your Social Security benefits and to pay for both basic living expenses and those lifestyle luxuries you’ve been waiting to enjoy.
Over the years, you’ve become accustomed to the regular ups and downs in the investment markets, and you’ve not been too much of a Nervous Nellie about it, either. You’ve seen the “peaks and valleys”, following the news about the ups and downs of the market, all while mitigating the worst effects of those “downs” by diversifying your holdings. In fact, you’d come to conclude, it didn’t matter so much when those market ups or downs occurred – you just kept investing, confident that the general trend would continue on its historical upward trajectory.
Now that you’re periodically taking money out of the portfolio, however, the timing of returns is likely to matter a whole lot more. Uh-oh. If a high proportion of negative investment returns should happen to occur in the beginning years of your retirement, selling investments to support your cash flow needs could quickly dissipate the assets needed to sustain withdrawals in later years. You need a buffer, one that doesn’t involve taking assets out of the market just when those assets need to work their hardest for you.
Buffer assets are those available outside your financial portfolio, assets to support spending during periods when your investments are in a “down” period. A reverse mortgage line of credit, since it is not vulnerable to stock market unrest, could be there to provide the stability of income you’ll need throughout your retirement years.
Structured as a home equity line of credit, your reverse mortgage, in short, won’t let the big bad Sequence of Returns wolf blow your retirement down!
Not intended as financial planning advice. Please consult a financial advisor