What happens in the market shortly before and after retirement–during the “fragile decade”–is more important than one might think. If retiring during or before a market downturn, the combination of withdrawals and poor performance can quickly deplete a retiree’s main source of income and make it difficult to recover. This is known as “sequence-of-returns” risk. It is important for investors to be protected from poor financial market performance during this “fragile decade.”
Will they be forced to retire and begin withdrawing when the market is down? Will poor returns after retirement deplete their nest egg?
Retirement is full of major, often irreversible financial decisions and hidden risks. How do we help our clients avoid some of the sequence of returns risk? One of our strategies is through a tailored made Cash Management Portfolio.
Cash Management in Retirement
We know that holding cash on deposit has done little to preserve wealth in real terms for much of the past decade & this theme is likely to continue for the foreseeable future.
Cash is essential for financial stability while also considered as part of a total wealth portfolio.
As you approach retirement, it might be sensible to build up your cash savings gradually, if you haven’t already done so. This way, you can avoid being entirely reliant on market performance to produce your retirement income from investable assets. At this stage, depending on your personal circumstances, it might be advisable to hold up to two years’ expenditure in cash. This could include any large expenses you might have planned over the short term.
Having easily accessible cash savings ensures you aren’t entirely reliant on market performance to fund your retirement. A cash savings strategy can help you to weather market downturns in retirement and allay any fears of future crises following the impact of the pandemic. This will help you feel prepared for whatever lies ahead.
Our cash management portfolio service allows us to strategically control the flow of money from your investment & retirement accounts to your current account, whilst your cash is earning the highest rate available. In addition, no longer will we be forced to sell investments at a lower price because you need a certain amount of retirement account income every month. Our cash management portfolio service provides a simple, seamless process providing access to multiple cash deposits in a safe, secure manner. With a single cash portfolio account, you gain access to the whole savings market.