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Prepare for Detours in the Market: Manage Your Plan in Real-Time

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Once you’ve created an income plan for your retirement, don’t think you’re done when the numbers on paper meet your immediate expectations. A successful plan requires regular analysis and adjustments. Both might be required, either because your goals change or the world shifts.

That is the benefit of an income allocation plan over other types of planning.

When I wrote an article called Don’t Bet Your Retirement on Monte Carlo Models, I suggested reliance on safe sources of income, including annuity payments, and a modest outlook on the market to avoid huge ups and downs that you can’t control.

I did not suggest that you take your money out of the market entirely. Stocks, after all, offer a history of increasing value over time. The hair-raising loss of value, though occasional, tempts some investors to avoid the roller-coaster ride and thus miss out on the longer-term — and sometimes muscular — increases in the market value of equity securities.

What should you do when the Dow Jones average falls for most of a month, or pundits express concerns about a looming recession? Having less of your income dependent upon the market helps. Diversifying your source of withdrawals (primarily your traditional rollover IRA) in a balanced portfolio of stocks and bonds is........

© Kiplinger