How many years did you work to accumulate your nest egg?
Market losses = Time Losses
Like many of the Stewards we work with, most began working around 25 years of age and continued diligently until 60 or beyond. That’s 35 years. For simplicity’s sake, let’s look at someone who saved $1 million over that 35 year working career. And let’s do some math, shall we?
- A 1% decline in their $1M portfolio means they worked for approximately 1/3rd of a year to save the money that was lost
- A 20% decline in their portfolio erases 7 years of savings
(35 years X .20 drop = 7 years)
As we saw in 2008, many people saw their nest egg decline by 40%. That represents a loss of 14 years of savings! It’s no wonder the most successful among us don’t enjoy seeing their portfolio decline in value. By converting financial values to time, the retiree is able to cast a different light on their accumulated wealth.
Now you can see why we spend so much time discussing appropriate amounts of risk, proper strategies for preserving wealth, and mindfulness toward efficient distribution of assets to create retirement income. To remain focused solely on accumulation throughout retirement may undo years of sacrifice when markets ultimately fall.
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