A market “reset” and a major market correction

Many investors who are in the later stages of their professional careers feel that a major drop up in their portfolios would be a major setback in their retirement – less time to recover.

History shows that 5% to 9.9% drops (pullbacks) happen more than twice a year, 10% to 19.9% drops (corrections) twice within three years and 20% or more drops (bear markets), once every five years although we haven’t seen one for over a decade at this point. Over the next five decades, there will be seven to ten recessions (a fall in GDP in two successive quarters).

The Monday Morning Millionaire Program encourages members in retirement to live from 4% of their portfolio.  That way, their portfolio will be very unlikely to be depleted, in fact, it will likely grow, members will not be concerned with longevity risk and they will be able to leave a legacy.  Given the predictable market drops, investors need to be prepared to tighten their belts when these market drops inevitably occur unless they want to encroach on their capital.

There are not, or there should not be any members of the Monday Morning Millionaire Program who could not live on 30% less of their income, for a period of time. How long will that period be?