Retirees Need to Be Careful with Finances, Investments during First Five Years of Retirement

By Brenner Spiller & Archer | June 8, 2016

The first five years of retirement are absolutely critical when it comes to ensuring your financial security going forward. Anybody who is thinking about retiring needs to consider that their nest egg might not be large enough to last for the rest of their lives, which can lead to serious debt management problems and even bankruptcy.

A recent survey conducted by Prudential, the major life insurance, retirement and investment management company, found that “negative investment returns” early in retirement can be devastating to a retiree’s net worth. That’s because the effects of an investment mistake can be exacerbated when a person no longer has a steady income to offset the mishap.

Prudential analysts recently compared two hypothetical scenarios that highlight the importance of good money management during the early years of retirement. A person with negative net returns in the first five years of retirement and positive returns later on is far more likely to be wiped out financially than a person with positive net returns in the first five years of retirement and negative returns after that. In fact, researchers found that a $1 million retirement portfolio that did well early in retirement but struggled later on actually doubled over a 30-year period.

Although approximately 90 percent of U.S. seniors who retire said that they enjoy life, according to the same Prudential survey, many of these individuals may not be prepared in the event that their retirement savings quickly evaporate. The reality is that a number of “financial pitfalls” await many Americans who retire. The best thing a potential retiree can do is to get sound financial advice and make sure that they avoid investment mistakes in the first few years of retirement.

For further information, check out the USA Today article, “5 Crucial Retirement Years for Your Money.”

If you are struggling with debt and could use some help, whether it’s seeking out debt relief or filing for Chapter 7 or Chapter 13 bankruptcy, you need to speak with a knowledgeable bankruptcy and debt management lawyer immediately. The experienced bankruptcy attorneys at Brenner Spiller & Archer are prepared to help you. Contact us today to schedule a free consultation.