Stock Market Corrections and the Effect on a Retiree's Income, With Ed Whitaker, Tremont, Illinois

When there's a market decline, it's not uncommon for the market to gain that back.  Stock market corrections are particularly bad for retirees because if there's a 15% decline in the market and the market does gain it back at 15%, it's still not back to even, as there would still be a 2% loss, says Ed Whitaker, of Tremont First Financial, in Tremont, Illinois.

A lot of retirees take about 5% of their portfolio for income.  Whitaker says that if there's a continued decline in the market, they continue to take out their 5% and they'll need to take a higher and higher percentage every year, which means they'll have to drastically reduce their income or they'll run out of money. 

There are alternatives, says Whitaker, to include retirement products that can protect their principal in case of market risk or keep up with inflation.  He says it's important to start with a qualified financial advisor, who can find the right balance of risk and safety in a portfolio.  "It's not the advisor's job to make the retiree rich but to keep him rich," says Whitaker, which is a whole different philosophy. 

Ed Whitaker can be reached at tremontfirstfinancial.com or 309-925-2121.   He spoke with Retirement News Today, providing online, on-demand, retirement planning video content.

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