Thursday, December 20, 2018

Handling net worth during stock market volatility

I had a meeting Wednesday afternoon with a financial advisor, and I did get an idea of how investment planning for retirees based on expected lifespans works.

Planners are likely to expect to see active seniors in their 70s live 20 more years. They will tend to recommend “conservative growth” strategies vs. “conservative income”, that in my case can simulate a lifestyle earning about $80000. This sounds like “Economic Invincibility” indeed.

Because I have a mechanism to move personal annuity income back to the trust to pay it “rent” (though charitable donations) for my condo, there can be a gradual loss of net worth unless the annuity gains value to make up for it.  When the stock market (and derived money markets) rises, this will hide the “rent” and make it appear that net worth is staying steady.  But recently the volatility has wiped out most of the gains prior to this year, making the spending of the past years more conspicuous. .

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