WARNING: PORTFOLIO FAILURE

Retirement Anyone? That’s the conversation between my tennis partner who is a very successful attorney (heck of a forehand as well!) and myself. He’s turning 59 years old this year, happily married and starting to talk about realistically “Retiring”. He’s aware that I’m a co-founder of Your Retirement Advisor.

But there’s one problem: One of his main concerns is running out of money in Retirement…..

In the Retirement World, we call this term “Portfolio Failure”

As we were wrapping up a fun and yet always competitive tennis match, he hit me with the question:

“I’m concerned if I do in fact retire, will my portfolio last?”

I responded with a question, “Has your Broker talked to you about portfolio failure?”

His response, “What the heck is that?” (questioned answered).

The simple answer I conveyed,  “Running out of money during retirement…it’s something everyone planning for retirement must consider and obviously avoid.”

I continued while we paused our game (the extra breather helped two aging tennis players),”One of the biggest risks along with Health Care Risk is something called Longevity Risk and it’s a “silent nightmare” among pre-retirees or people like you who are looking to enjoy a comfortable retirement.

Do you understand the S&P 500?

His response: Of course I do….Who doesn’t! What’s that have to do with Portfolio Failure?

My point is if you had a Million Dollars invested in the S&P 500 over the last 40yrs, withdrawing 4% per year to take income along with your Social Security with an Average Inflation Rate of 4.25% over the last 40 yrs, your portfolio would run out of money in 15yrs!!!!

“Are you serious Brian? 15 years…I’ll only be 74…and broke. Why hasn’t my broker told me about this stuff? We haven’t talked about withdrawal rates or anything that’s going to happen in retirement. My wife and I think we’re going to live a good long time. We’ve been wondering when our guy is going to have an income planning meeting with us instead of reviewing quarterly statements and talking about our family. Neither of which addresses what we’re really concerned with.”

Let’s finish up the match and then I need to go ask some questions and get some answers.  Let’s talk more soon.”