The sequence of returns is an important concept to think about when it comes to retirement planning. It can mean the difference between a successful retirement and one that’s not so lucky. If your client’s retirement income stems primarily from their investments, when the market is doing well, they will receive higher returns on their investments.
When the market goes down, they might be forced to sell some of their investments to meet their income needs. This can lead to a dramatic decline in a client’s portfolio over time.

The sequence of returns risk isn’t talked about enough with clients in the financial planning and investment world. Losing principal in your retirement accounts when you are planning to take income, or are taking income, is not a winning strategy. This could lead to you needing to reduce your expenses or sell assets to meet expenses.

A great option to give your clients is to help facilitate the purchase of an annuity contract – picking a good product that is suitable for your client from an A Rated insurance carrier can make a world of difference in their future. This can certainly reduce financial risk and give your clients the lifetime protection and income they deserve.

Talk to your clients who are planning for their retirement about the sequence of returns and how important it is to secure their income for life sooner rather than later.