Looking back, the global pandemic was a scary roller-coaster ride, but months after the crisis, savers that had their retirement money guaranteed and growing safely are thankful that they could ignore the hysteria.
Even for those who remember Black Monday of 1987, the dot-com bubble or the 2008-09 financial crisis, the volatility of the last few years initiated by pandemic headlines may not be over yet.
Americans investing in equities for retirement are hopeful that the damage done to their portfolios won't happen again, but for those Americans who are out of work, it's a struggle to keep contributing to their plans if they can't get reemployed.
To maintain your lifestyle in retirement, you should aim to save a minimum of 20 times your income at retirement, so if you make $50,000 a year, you should save $1,000,000 in your IRA. The idea of having a sizable retirement nest egg can fade mighty fast in a severe market downdraft. Savers should be aware that while $1 million is a lot of money to aim for, the right amount depends on the life they want to live in their golden years.
The pandemic showed savers that making a wise decision can be nothing more than letting an annuity do the heavy lifting for them. The Great Recession was a teaching moment for savers. It was much easier for investors to stay invested with their money in an annuity – than at risk in the market. Staying the course is a lot easier when your retirement savings are protected and you don’t have to worry about how far down it’ll go or how long it’ll take. It will really pay off for annuity policyholders keeping their cool during an inevitable massive downdraft.
Asset allocation can only do so much to limit risk, not eliminate it. People who have a plan in place to guard against risk, secure their gains and guarantee income will feel immeasurably more confident in their retirement years.
