Can Your Retirement Savings Survive the Coming Stock Market Crash?

Can Your Retirement Savings Survive the Coming Stock Market Crash?

Mar 4, 2019

The major U.S. stock indexes such as the S&P 500, Nasdaq, and Dow Jones Industrial Average all tend to garner a lot of attention from the media. When they’re “up,” everyone seems to want to get in on the excitement. But when they’re “down,” the ramifications for investors – particularly seniors and retirees – can be devastating.

What doesn’t receive a lot of media attention is the fact that we haven’t had a true bear market correction since the Great Recession of 2008. That means, despite the downturn experienced briefly at the onset of the COVID-19 pandemic, the economy is ripe for a substantial market correction. When that correction comes (and it inevitably will at some point), it could theoretically be one of the most significant of all time given the historical trends of bear markets.

Below we will take a look at what an impending stock market crash might entail, review how such an event could impact one’s retirement savings, and discuss how Annuity Emporium offers options to help you participate in the stock indexes while also securing protection from an upcoming correction.

What is a Stock Market Crash?

A stock market crash correlates with an abrupt and significant decline in stock prices. This may trigger either a prolonged bear market or be an indication of systemic turmoil within the overall economy. While there isn’t a set numeric definition for a stock market ‘crash,’ a stock market ‘correction’ is typically defined as a 10% or greater decline in one of the major U.S. stock indexes.

Historically, there have been 27 stock market corrections (including the COVID-19 pandemic) since World War II. The average decline for those corrections was 13.7%, and according to CNBC, recoveries have taken four months on average. However, what most investors do not realize (and what the media is definitely not telling you) is that when a correction falls into what’s known as a bear market (defined as a 20% or greater decline from a high), the recovery period can be exponentially longer – often taking several years.

When it comes to bear markets (which we’re historically due for in the very near future), they tend to last at least 14.5 months on average. And bear markets historically take at least two years to fully recover from.

If you’re investing in stocks while retired or near retirement age, the question you have to ask yourself is:

“Can my retirement savings withstand a bear market crash with a two-year correction period?”

The average decline for a bear market is 32.5% (as measured on a close-to-close basis). Can your retirement savings truly withstand a more than 30% decline that may take several years to recover from?

The good news is that you can participate in the markets (reaping the rewards of the “ups”) while simultaneously protecting your investment from an impending bear market crash through fixed index annuities.

What are Fixed Index Annuities?

Fixed index annuities allow you to allocate funds from your account to participate in stock indexes. However, unlike a traditional stock purchase, you’re fully protected from risk – including a bear market crash and any resulting losses (which can be catastrophic).

In fact, fixed index annuities allow smart investors to:

• Receive market competitive returns
• Complete account protection against market volatility
• Secure a stream of guaranteed lifetime income in retirement
• Have your retirement income keep up and grow with inflation

How is that possible?

Unfortunately, fixed index annuities don’t receive as much attention as the latest IPO or meme stock. But they are an excellent investment option – particularly for individuals near retirement, in retirement, or carefully planning for retirement – that provides the benefits of market upturns without exposure to the risk of a coming economic downturn.

In short, the way fixed index annuities work is as follows:

• When a market is “up” for a particular year, you “lock in” those earnings forever.
• When a market is “down” for a particular year (even a 30%+ bear market downturn) you’ll never see a negative return. Instead, you’ll simply receive zero percent interest (thereby avoiding a 30%+ decline you would have endured by investing directly in the markets).

  By taking advantage of fixed index annuities, you’re essentially reaping the rewards of bull market years while protecting yourself from the unnecessary (and potentially devastating) exposure of bear market years that could leave you with 30%-40% declines which require a multiple-year recovery.

  Some of the benefits of fixed index annuities include:

  • Guaranteed principal protection
  • Market participation without downside risk
  • Guaranteed lifetime income you cannot outlive
  • Retirement income growth to keep up with inflation

  Whether you’re nearing retirement or just starting the planning phase, fixed index annuities can be a rewarding and sound investment offering peace of mind. But in addition to security, they offer you the advantage of remaining invested in the markets so you can generate wealth through upswings.

  How Can I Invest in Fixed Index Annuities for Guaranteed Lifetime Income?

  Whether you’re making a direct principal investment or rolling over an IRA, 401(k), or pension, Annuity Emporium makes it easy to identify the best type of annuity for your specific circumstances which will allow for the guaranteed income stream you need to provide a comfortable retirement.

  Currently, for a 65-year-old American couple, there is a 50% chance that at least one of the spouses will live past the age of 93. But apart from Social Security (which some might argue isn’t really guaranteed more than 20 more years given the changing world economy), annuities are the only true guaranteed lifetime income source available which you can’t outlive.

  Whether you’re nearing retirement age or still have several years in the workforce, annuities offer you unique peace of mind in having maximum growth potential but without the downside risk of a bear market which, historically speaking, will absolutely occur in the near future.

  To learn more about how Annuity Emporium can help you achieve your retirement goals, contact us today at 866-321-AEIS or at info@annuityemporium.com for a free consultation.