Share The 3 Pressure Points In Retirement
Markets Are Volatile
US equity markets have been exceptionally positive in the last few years and provided excellent returns. But if we look further back, we can see that returns can be very bumpy, especially during the 2008 Great Financial Crisis and the Covid-19 pandemic. Typically, such risks might be remedied by the “safety of bonds”, but bonds have risk too. When rates rose in 2022, we saw the most drastic bond drawdowns in decades.
Global Economic Uncertainty
Is Rising Fast
The world is changing. New regional alliances are forming, new political regimes are overturning old policies, and all of them are creating uncertainties. The graph above is from three academics who track world policy uncertainties. See the rise in recent years.¹
Sequence Of Returns Risk
In The Market
When there is no need to withdraw from the portfolio as retirement income, the sequence of returns is irrelevant as the portfolio continuously trends upwards and equalizes every five years.
But if one intends to withdraw from the portfolio as retirement income, the sequence of returns matters significantly. In the worst case, a retiree would run out of money at 85, while in the best case they would run out of money at 95. This 10-year gap is entirely caused by the sequence of returns risk, so retirees seeking preservation of their investments need to avoid losses early in retirement.
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GBU Life has partnered with Smart Retirement Corporation to offer free access to the Real Return Reporter to its contracted agents. Market data sourced from the Index Standard. Neither Barclays Bank PLC, or Barclays Capital Inc., nor any affiliate (collectively “Barclays”) is the issuer or producer of the products referenced herein (“Asset Guard Fixed Index Annuity and Future Flex Fixed Index Annuity”) and Barclays has no responsibilities, obligations or duties to investors in such products. The Barclays indices referenced herein including as applicable any component indices that form part of these Indices are trademarks owned by Barclays Bank PLC, or Barclays Capital Inc., and licensed for use by GBU Financial Life as the Issuer of the products. While GBU Financial Life as the issuer of the products (the “Issuer”) may for itself execute transaction(s) with Barclays in or relating to the Indices in connection with the products, investors acquire the products from the Issuer and investors neither acquire any interest in any Index nor enter into any relationship of any kind whatsoever with Barclays upon making an investment in the products. The products referenced herein are not sponsored, endorsed, sold or promoted by Barclays and Barclays makes no representation regarding the advisability of the products or use of any Index or any data included therein. Barclays shall not be liable in any way to the Issuer, investors or to other third parties in respect of the use or accuracy of the Index or any data included therein. GBU Life is the marketing name for GBU Financial Life. Annuities are not short-term products and are issued by GBU Life, Pittsburgh, PA. Optional booster/contract (or rider) fees increase the participation rate and are deducted from the index strategy value at the beginning of the index term. Increased participation rates can result in greater interest credited. During the surrender charge period, withdrawals exceeding 10% will be subject to a surrender charge that may be higher than fees associated with other types of financial products and may reduce principal. Withdrawals for amounts over those allowed during the guaranteed period are subject to surrender charges defined in the contract. Withdrawals prior to 59½ may be subject to IRS penalties, separate from the annuity’s schedule of surrender charges. Products and features may vary by state. No statement contained herein shall constitute tax, legal or investment advice. You should consult with a legal or tax professional for any such matters. This is a summary of the contract provisions. Please refer to the contract for details of surrender charge schedule benefits and exclusions. Contract Form Series: ICC23_SPDA_IA_CON_(01-23), SPDA_IA_CON_FL_(07- 23), SPDA_IA_CON_(07-23), ICC23_FPDA_IA_CON_(01- 23), FPDA_IA_CON_FL_(07-23), FPDA_IA_CON_(07-23)