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Don’t Make Me Say I Told You So 187
April, 2020
A History of Declines (1949-December 2019)
Average Average Last
Type of Decline Frequency 1 Length 2 Occurrence 3
-5% or more About 3 times a year 44 days December 2018
-10% or more About once a year 114 days December 2018
-15% or more About once every 4 years 270 days December 2018
-20% or more About once every 7 years 431 days March 2020
Source: RIMES, Standard & Poor's.
1 Assumes 50% recovery rate of lost value.
2 Measures market high to market low.
3 The average frequency and average length rows exclude the most recent decline in December 2018 because the 50% recovery of lost value occurred after 12/31/18.
These declines can have a direct impact on the value of your
investments, which means less money to use for retirement
income. When you have less money to use for retirement
income, you will have to reduce your income or risk running out
of money. What is also extremely important to a retiree is the
order in which you experience positive and negative returns,
also known as the “sequence of returns.” Let’s look at how
the sequence of returns can have a dramatic impact on your
retirement income.
Chapter 5: Things That Can Wreck Your Retirement
