Transcript:
Worried that the next market crash will gut your retirement savings? Before you panic sell, let me show you four battle-tested strategies that keep your income flowing no matter how ugly the downturn. Hi, I’m Hunter Brockway, founder of Boca Retirement Strategies. We help you retire successfully, stress-free, with more money and fewer taxes. Today, we’ll cover how we can help you retire with more money so you can ride out any storm and stay on track.
Number one: diversify to minimize losses. Don’t put all of your eggs in one basket. A portfolio that’s 100% invested in stocks can swing wildly. Instead, mix in bonds, real estate funds, and alternative classes. Consider small allocations to things uncorrelated to the market like cash-flowing real estate or commodities. In a crash, your bonds or alternatives will cushion stock losses, so your overall portfolio drop is much smaller.
Number two: the income guardrails. The Guyton and Klinger withdrawal strategy. Like guardrails on a winding mountain road, the guardrails of this keep your retirement portfolio intact. We believe you need a dynamic withdrawal strategy that protects you in bear markets and grows in bull markets. We use the Guyton and Klinger guardrail strategy. First, you set a baseline withdrawal strategy, say 5 1/2% of your portfolio is standard. Each year, compare portfolio performance to expectations or large withdrawals or lack of spending. If your portfolio is below a lower guardrail, you tighten your belt up a little bit, reduce withdrawals by, say, 10%. If your portfolio is above the upper guardrail, you can loosen up, maybe increase withdrawals by 10%. This automatic pay cut in bad times, bonus in good times, keeps your money lasting for decades.
Number three: build your war chest. Carve out a war chest of three to five years of income needs in cash-like or very stable investments, money markets, bonds, stable dividend-paying companies. Why? In a crash, you don’t want to sell stocks at a permanent loss to fund living expenses. You pull from your war chest. Meanwhile, your long-term investments have time to recover. Over time, you refill the war chest from dividends or portfolio gains.
Number four: stay invested through the volatility. Finally, remember, the market’s best days often follow its worst. Historically, one year in five since World War II, stocks dropped 30% or more. But just missing the top 10 best days over 20 years can cut your returns by nearly half. Crashes feel unique, but this time is not different. Staying invested through the swing gives you compounded gains that build lasting wealth. To recap, diversify across asset classes. Use guardrails to flex your withdrawals. Keep a war chest for income and down markets. And stay the course, don’t miss the rebound. If you have any financial questions, you can send them in to contact@bocaretirement.com. Before you go, if you’re looking for a free tax-smart retirement plan, tailored to your unique specific situation, you can head over to our website at bocaretirement.com, enter your information in the pop-up, and we’ll build you a plan tailored to your unique specific situations at no cost or obligation. If for some reason that pop-up doesn’t show for you or if you click out of it, no worries, just send us an email at contact@bocaretirement.com. Again, that’s no cost, no obligation. We’ll put together a simplified plan for you to help you take the next steps toward a successful, stress-free retirement with more money and fewer taxes. See you over there. Bye.