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LordHenriVoton \/ iStock.com<\/p>\n
The impact of volatility on wealthy retirees can be outsized simply due to the fact that they have the largest account balances.<\/p>\n
Read Next: This \u2018Boring\u2019 Investment Could Be the Secret to Never Running Out of Retirement Income<\/a>\u00a0<\/p>\n Find Out: 5 Clever Ways Retirees Are Earning Up To $1K per Month From Home<\/a>\u00a0<\/p>\n Missteps handling volatility at this level can result in significant retirement<\/a> shortfalls, making it extra important to avoid common mistakes. Here are four rules that wealthy retirees should follow amid market volatility<\/a>.<\/p>\n Don\u2019t Tap Accounts Too Early<\/p>\n Wealthy individuals often retire early, and this can lead to some big financial planning mistakes. If you\u2019re younger than 59 1\/2, for example, tapping your pretax retirement accounts, like traditional IRAs and 401(k) plans<\/a>, not only results in taxation but also a 10% early withdrawal penalty, per the IRS<\/a>.<\/p>\n But that might not even be the biggest problem. Tapping retirement accounts early can materially shrink retirement savings, as it stops money from compounding.<\/p>\n If you earn a 10% average annual return, for example, your money will roughly double every seven years. If you withdraw $200,000 in retirement funds at age 59, for example, you\u2019ll be missing out on another potential $200,000 in retirement savings by the time you reach age 66.<\/p>\n This is particularly true if you withdraw money during volatile periods when your account value is down.<\/p>\n Learn More: Warren Buffett\u2019s Advice To Prepare for a Recession Is S-Tier<\/a>\u00a0<\/p>\n Don\u2019t Allocate 100% of Assets to Stocks<\/p>\n It\u2019s true that retirees need a growth component in their accounts, as that money may be needed for 30 years or more. But keeping 100% of your money in stocks right as you retire can subject you to extreme \u201csequence of returns\u201d risk.<\/p>\n Imagine the same scenario where you plan on earning a 10% average annual return in retirement, doubling your money roughly every seven years. But then in your first year of retirement, the markets drop by 20%. While you may indeed earn a 10% average return over 30 years, you\u2019ll immediately be starting from a base that\u2019s 20% smaller.<\/p>\n This type of volatility can greatly alter your long-term financial planning<\/a>, and it\u2019s entirely possible if your account is 100% in equities.<\/p>\n Avoid Buying a \u2018One-Size-Fits-All\u2019 Investment<\/p>\n There\u2019s no such thing as an \u201caverage\u201d investor. Each individual has their own investment objectives<\/a>, time horizon, risk tolerance and financial needs. If you follow a generic asset allocation that\u2019s simply based on your age, you won\u2019t have an efficient portfolio that matches your specific financial situation.<\/p>\n These types of generic portfolios may not even provide the diversification benefits that you think you\u2019re getting. Affluent investors in particular should gravitate toward customized strategies that better reflect their specific financial needs.<\/p>\n Coordinate Withdrawals Across Accounts<\/p>\n Wealthier retirees typically hold a variety of accounts, both taxable and tax-advantaged. Choosing which account to withdraw from can have a big impact on your tax situation.<\/p>\n When account values fall, for example, it may reduce future tax liabilities if you take a withdrawal from your tax-advantaged accounts. Working with a tax advisor is imperative.<\/p>\n Editor\u2019s note: This article is for informational purposes only and does not constitute financial advice. Investing involves risk, including the possible loss of principal. Always consider your individual circumstances and consult with a qualified financial advisor before making investment decisions.<\/p>\n More From GOBankingRates<\/p>\n This article originally appeared on GOBankingRates.com<\/a>: 4 Investing Rules Wealthy Retirees Need To Handle 2026 Volatility<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"LordHenriVoton \/ iStock.com The impact of volatility on wealthy retirees can be outsized simply due to the fact…\n","protected":false},"author":2,"featured_media":380172,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[14],"tags":[114,268,287,85,46,266,267,5426,10060,181989],"class_list":{"0":"post-380324","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-personal-finance","8":"tag-business","9":"tag-finance","10":"tag-financial-planning","11":"tag-il","12":"tag-israel","13":"tag-personal-finance","14":"tag-personalfinance","15":"tag-retirement-income","16":"tag-volatility","17":"tag-wealthy-individuals"},"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/posts\/380324","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/comments?post=380324"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/posts\/380324\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/media\/380172"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/media?parent=380324"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/categories?post=380324"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/tags?post=380324"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}