6. Sequence of Investment Returns
“...The mutual fund I own earned 4% during the last ten years, so I am obviously much better off than my neighbor whose fund only earned 2% over the same period....”
As I write this in early 2012, the stock market has almost recovered to its pre-recession levels, with the S&P 500 currently hovering around 1,400 points, relatively close to its all-time high of 1,565 points in October 2007. As a retiree, although your portfolio might be back to where it once was, you are nowhere near as well off as you were prior to the Great Recession. In fact your successful retirement might now be in jeopardy, especially if you had to withdraw money from your nest egg throughout the most recent bear market. The reason ...