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Section 1
You Must Have Growth in
Your Portfolio
Americans are living longer and retiring earlier, yet Social
Security benefits and traditional pensions are unlikely to
provide enough for a comfortable retirement. You will need a
large nest egg to support a retirement that may last 20, 30, or
even 40 years. To ensure that you don’t outlive your money, you
need to invest in a way that allows your nest egg to grow. You
need growth, because there is a good chance that you’ll have
to turn these assets into a stream of income during retirement.
Most retirees perceive market risk and losses in their investment
portfolio as the biggest threat to retirement security. In reality,
however, the single most corrosive influence on retirement income
over a long period of time is inflation. Market risk can be reduced
or avoided in a number of ways, but inflation is a virtual certainty.
As mentioned earlier, taxes will also take a large bite out of your
retirement income.
The following chart shows a state-by-state breakdown of the
rate of return needed to break even after taxes and inflation. To
Chapter 3: You Must Have Growth In Your Portfolio
