Avoiding Negative Years

**Financial Consideration: Participation in Market Downturns During Retirement**

It is crucial to be aware of the potential repercussions of experiencing financial market downturns or investment losses, especially as one approaches or enters retirement, during which income is being drawn from these assets.

**Mitigating the Impact of Negative Performance Years**

Consider the scenario where your investments depreciate by 57%. To return to your original value, a gain of 132% is required, assuming no withdrawals are made during this recovery period. This illustrates the inverse relationship between gains and losses.

A practical example of this occurred with two major U.S. stock market indices between October 2007 and March 2009, a period during which they experienced significant declines. It took nearly four additional years for these indices to fully recover. This situation underscores several key points:

1. Recovering from market losses can be a time-consuming process. Therefore, it is essential to evaluate the risks associated with market participation prior to making investment decisions.

2. Drawing an income during a market downturn can exacerbate the challenge of regaining losses, thereby increasing the risk of depleting financial resources in retirement.

For further illustration, the charts below demonstrate how the timing of gains and losses impacts values when an income is being generated from retirement savings.

One way to avoid investment risk is to avoid investments. No comparisons can be drawn between investments and fixed products. However, products earning fixed interest are a viable alternative to risking your retirement money. One such financial product offering fixed interest is a fixed indexed annuity.

Some fixed indexed annuities incorporate Annual Reset strategies, which allow you to:

1. Earn interest linked to external market indexes when the index experiences positive movement.

2. Avoid any loss due to negative index movement.

3. Start over each contract year at the current market index value (this can be particularly advantageous following a negative year).

Annual Reset strategies available in many fixed indexed annuities can keep you from having to make up lost ground during retirement.

Imagine a financial opportunity where you can benefit from interest tied to positive market indices while simultaneously safeguarding yourself from potential losses in negative years.

For a complimentary, no-obligation financial review, please click here to connect with a Future Benefits Agent.

Alternatively, you can reach us at 901-754-2040.

*Please note that we are not stock brokers or financial advisors, and we do not provide investment advice.

Refer to our Professional Disclaimer for more details.