b'FOR YOUR PRACTICEContributed by Market volatility and retirementJeffrey E. Wherry, CFP, CLU, ChFC If youre saving for retirement, youre probably used to seeing the value of your retirement Director of Research and Planningaccounts go up and down with the financial markets. However, once you retire, volatility Treloar & Heisel Wealth Managementmay be a greater concern. www.treloaronline.comTaking withdrawals from your retirement accounts during market downturns can significantly reduce their value over the long term. This is why its important to have alternate sources of retirement income that are not directly impacted by market conditions. To better understand this problem and how you can prepare for it, consider the following example. A potential retirement scenarioImagine youre 65 and planning to retire. You have a substantial portion of your retirement Taking withdrawalssavings in a traditional individual retirement account (IRA). Assume that the investment results for this account over the next 20 years of your retirement will mirror the annual from your retirementreturns of the S&P 500 Index from 1973 to 1992.During this time period, the average annual return was 12.75%. However, there were five years with negative returns. You accounts duringmay not have accounted for the effect withdrawing money from your investment account market downturns canfollowing a year with a negative return could have on the overall balance of the account. Also, as you look to withdraw these savings over the course of your retirement, either significantly reduce theirbecause you need the funds for living or other expenses, or because you want to satisfy the required minimum distribution (RMD), you may be advised by your accountant that value over the long term. your withdrawal will be taxed as ordinary income. A different approach Instead of taking out of your IRA the full amount you needed to cover your expenses every year, what if you avoided taking money out the following year after the portfolio produced a negative return? (Youd still withdraw at least the annual RMD2 once you turned 72.)AAP Periospectives| 24'