How Retirees Should Think About Market Corrections
 

Stock market corrections are a part of life when it comes to investing, and they happen more often than investors may think. Consider this: Since 1900 there have been 123 market corrections, according to Ned Davis Research, a global investment firm. A market correction occurs when the stock market declines between 10% and 20%. A bear market happens when the sell-off is greater than 20%. Pretty scary for retirees for sure. But after every stock market correction ,it took an average of less than a year for stocks to recover. Even with the stock market crash of 2008 when the Dow Jones Industrial Average fell more than 50%, stocks rebounded quickly and six years later are trading at all-time highs.

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Here we go again. Ride it out - why - because you might take your money away from my firm. The average life expectancy of a male in the US today is 76 yrs. News flash - along comes 2008. Wait 6 years for recovery. Probably cut back on spending and sleep a little less at night. If you were 65 yrs. old in 2008 you just spent 54% of the rest of your life waiting for the comeback. If you were 70yrs old your beneficiaries would be happy. I would be happy to leave my money with an advisor that will guarantee 4% insured ROA for the next 5 years. Please send name.

Your first chart (Vanguard 60/40) is a withdrawal over 8 years not 7. Thus investing in the Vanguard 60/40 over eight years yielded 1007781(ending balance) + 310367 (8 years withdrawal @ 4%) = $1,418,148.

A ten year t bill Jan 1 2007 was issued at 4.76%. Over the first eight years (same period as your chart) this would yield $1,450,654. Plus this is backed by the US government. It will be interesting to see what Vanguard 60/40 does the next two years. According to some the market is overvalued at today's P/E ratio and bonds appear to be at the low point. I do know that the that ten year T bill above will continue to accrue $141,389 more interest for the remainder of it's term (two more years).

As long as you do not withdraw the 4% for living expenses.