Everyone knows that most retirees’ biggest fear is running out of money. We typically find that, if someone has saved $1 million, they want $2 million, and if they have saved $2 million, then they want $4 million. Everyone seems to worry about it.
A reason this is a big concern is because of market volatility. This is when your investments, or the money you have worked hard to save over the years to provide for your retirement, loses value. A prime example of this that everyone remembers was the financial crisis in 2008. During this time, the market was down more than 50%. A running joke was that 401(k) accounts had become 201(k)s.
Many people who retired during this time had to go back to work if they had not planned the right way. Imagine that: You work 30 to 40 years to get to retirement and are ready to pull the trigger, and then all of a sudden, something you cannot control changes your plan. Well, I would argue that you do have control over something like that. Although you cannot prevent the market from going down, you can prevent your investments from going down by having what we call a “retirement income plan.”
This post originally appeared at Kiplinger.