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Here's something you already know: The world is a pretty crazy place right now. From high inflation and rising interest rates to major market fluctuations, today's economic uncertainty goes beyond anything we've seen since the 2008 financial crisis - and possibly even before that.
SEE MORE Planning to Retire in the Next 3-5 Years? What to Consider Today
Yet aside from the immediate impact on the cost of living, what does all this heavy economic weather mean for your retirement plans? And more importantly, how can you protect your precious nest egg from the worst of its effects?
Stress-test your portfolio
The best place to start is by using financial planning software to figure out what a period of no or low growth may mean for your retirement fund. Ideally, this should be something a little more robust than the free software on the internet. Instead, you want enough "bells and whistles" to let you play around with different variables and really understand their potential consequences. (A qualified financial adviser can help you identify the best software to use. I like eMoney Advisor.)
These variables should be things like:
What if we see inflation at 6% for a decade?What if I lose 20% of my portfolio value in the next three years?
What if my annual rate of return during retirement is 5% not 7%?
By stress-testing your portfolio against these scenarios, you can figure out if you've got a gap between your projected income and the level of income needed to finance your planned retirement lifesty
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