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Is it possible to retire at the wrong time? 

Unlike previous generations that had the luxury of having their retirement funded by guarantees made by employers and/or the government, the assets you’ve accumulated in your 401(k) or IRA rollover could be your most important source of retirement income. Perhaps the most appealing feature of a pension is its guaranteed income for life, no matter when you retire or what happens in the market. Unfortunately, the same is not true of 401(k) and IRA rollovers. You can retire at the wrong time. Consider two different retirement portfolios: each starting with $500,000, invested in 60% stocks/40% bonds, and withdrawing $25,000 in annual income, adjusted each year for inflation.* In the example of investor A, the client’s year end value was exhausted after 16 years of withdrawals, whereas Investor B began taking withdrawals 10 years later and their year-end value was not exhausted, simply due to the timing of the positive and negative performance of the market.

* This illustration does not account for taxes or fees. Sources: Standard & Poor’s; Federal Reserve; Bureau of Labor Statistics. Data based on two 30-year periods ended on December 31, 1995 and 2005, respectively. Each portfolio assumes a first year 5% withdrawal that was subsequently adjusted for actual inflation. Each portfolio also assumes a 60% stock/40% bond allocation, rebalanced annually. Stocks are represented by the S&P 500, an unmanaged index. Bonds are represented by the annualized yields of long-term Treasuries (10+ years maturity). Inflation is represented by changes to the historical CPI. Investors may not invest directly in any index. Past performance does not guarantee future results.  This is a hypothetical example and is not representative of any specific investment. Your results may vary.