How to Stress-Test Your Retirement Income Plan Before Fall 2026
Written by Maurie Backman for The Motley Fool -> Stress-testing your retirement income helps ensure that your plan can survive some trying scenarios. Model a market downturn in early retirement to see what ensues. Make sure your income can keep up with rising costs. If you're
Stress-testing your retirement income helps ensure that your plan can survive some trying scenarios.
Model a market downturn in early retirement to see what ensues.
If you're getting close to ending your career, it's important to make sure you've saved enough to kick off your retirement. But seeing how much money you have in your IRA or 401(k) isn't going to cut it.
You may be looking at an impressive number on the screen. But will that number hold up over what could be a 20-year period or longer?
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Even if you're confident in your baseline withdrawal rate, you never know when surprisingly unfavorable circumstances could mess with your retirement income plan. So it's important to stress-test that plan to make sure it survives. Here are a couple of ways to do that over the next few months.
A stock market crash could hurt your savings if it happens at any point during your retirement. But a crash early on could be especially detrimental. If you're forced to lock in big losses early on, your portfolio might never manage to recover.
The solution? Run the numbers to see what would happen to your long-term income if your portfolio were to drop 20% or more early on. Then, figure out a way to limit your losses.
