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For someone still building wealth, a couple of bad years in the market is a passing cloud. For someone who has retired and draws a monthly income from that very portfolio, every fall in the market is money leaving the account that pays the bills.
Two years of disappointing equity returns have left many retirees uneasy, watching a corpus they spent a lifetime building shrink just as they have started to lean on it.
The fear is real. When you are drawing an income and the market is down, every withdrawal sells a little more of your holdings at a low price. Do that for too long, and early enough, and the damage can be hard to undo. It is the biggest risk in the early years of retirement, and the least talked about.
But here is the part that should settle the nerves. Through these same two years, retirees whose income was built the right way have barely felt the tremor. Their monthly income has arrived on time, every month, through all of it. What protected them was design: the portfolio was put together for a bad market before one came.
So the right questions are about your own plan. How much can you safely draw each year without eating into the corpus? How much of a retiree’s money belongs in equity, and how much in the quiet, dependable part? And is there a way to keep drawing your income in a down year without selling your best assets at the worst time?
There is plenty of advice on building a retirement corpus. There is very little on how to turn it into a salary that lasts, and holds steady when the market does not.
That is exactly what Dhirendra Kumar and I are taking up at this month’s Fund Advisor Live. We will look at what makes a retirement income vulnerable, and what a steadier one is built from.
If you are living off your investments, or close enough to retirement to be thinking about it, this is a session to make time for.
Fund Advisor Live is for Value Research Fund Advisor members, who join the session and put their own questions to us live..
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