Michael Neuenschwander with Outlook Wealth Advisors joined Eyewitness News Tuesday morning to share his perspective on how market instability and inflation are affecting retirement decisions.
Inflation may be slowing, but it's still high, according to Neuenschwander. He explained that if new tariffs are enacted, prices could spike again, meaning retirees will need more income just to cover basic living expenses.
One of the biggest dangers retirees face is known as the "sequence of returns risk." That's the idea that withdrawing money from investments during a down market can compound losses and drain retirement funds faster than expected.
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Neuenschwander said everyone faces this risk because you can't control market timing. However, he added that if you retire during a downturn and start pulling from your accounts, it can have long-term negative effects on your financial health.
Retiring during a market slump isn't necessarily a dealbreaker if you have a plan. To shield against the sequence of returns risk, Neuenschwander recommends building a balanced portfolio.
"Diversify across different asset classes and make sure you have a good mix of stocks and bonds," he said.
While it's still important to keep some stock exposure to fuel long-term growth, he suggests gradually shifting more assets into lower-risk investments as retirement approaches.
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