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RETIREMENT REDZONE

Down, Set, Hike!

The Retirement Red Zone is the period of time that is 15 years before and after your desired retirement age. Now, compare that to football. We love football. We love the West Virginia Mountaineers and if they are 15 yards or less away from scoring the last thing you want the team to do is throw an interception or fumble the ball right when they’re about to score. 

Compare that to your retirement. You’re about to score. You’re about to cross the finish line into retirement and the last thing you want to have happen is a major loss or a major market downturn that’s going to affect your retirement.

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In football, the red zone refers to the 20 yards closest to the end zone. It’s where a team’s strengths and weaknesses are often the most obvious — and where strategy is everything.

The red zone is where teams have a chance to score after a long and difficult drive, but it’s also where they can make mistakes if they go with a risky play or don’t do enough to protect the ball. When your team gets to the red zone, it can be the most exhilarating — or frustrating — part of the game.

What we have to tell them is that their plan isn’t necessarily broken, and the advice they were getting wasn’t all wrong. It’s the stage of life they’re in that makes their losses so devastating. If they’re near or new to retirement, they should have been playing things a bit differently than when they were farther down the field.

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The 3 Phases of Investment Savings

When we talk to people approaching retirement, we often find they have little understanding of the 3 phases of investment savings: 

ACCUMULATION PHASE
PRESERVATION PHASE
DISTRIBUTION PHASE

Unfortunately, all too often we see people go straight from accumulation to distribution without adjusting their portfolio mix or looking into investments that provide safer income. In the Retirement Red Zone losses hurt more. The industry calls this “sequence of return risk” — sorry, no fun sports metaphor here — and what it means is that it doesn’t matter if returns average out in the long run if your ongoing withdrawals deplete your portfolio before the market goes up again. So what should you be doing to protect the ball — or, in this case, your portfolio — as you move down the field?

Change your mindset. Instead of focusing strictly on growth, think about how much you're comfortable losing at this time in your life. And BWM is here to help you with just that, with tools that can analyze your portfolio and even stress test it to show how it would have held up in down years like 2000 or 2008.

These tools also can show you how long it could take to recover — and how quickly you could run out of money.

We’ve had a good run for over 25 years. But no matter whether the market is up or down when you’re close to retiring you should look at the strength of your defense and work out the smartest strategy possible to meet your goals during those “red zone” years.

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59 1/2 - WHY IS THIS AGE SO IMPORTANT?

You’re six years from your full retirement age. And you’ve lived through some of the most exciting and challenging times in modern history.

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Securities offered through Cambridge Investment Research, Inc., a broker-dealer, member FINRA/SIPC. Advisory services offered through Cambridge Investment Research Advisors, Inc., a Registered Investment Adviser. Beacon Wealth Management operates independently of Cambridge. This communication is strictly intended for individuals residing in the states of DC, DE, FL, MD, NC, OH, PA, SC, TN, TX, VA, and WV. No offers may be made or accepted from any resident outside the specific state(s) referenced.

 

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