As if it isn’t hard enough to plan for retirement, a whole bunch of other things to worry about pop up almost daily. The market is unpredictable, as is the world and events that affect the market like the pandemic and the war in Ukraine. So, how are you dealing with market risk? Many people take a “set it and forget it” approach to their retirement plan. That may have worked 30 years ago, but it doesn’t work now.
As you age and depending on your financial situation, you may want to consider taking certain steps to prepare your retirement plan for volatility in the market. Feelings of uncertainty surrounding the market are very common because we live in an ever-changing world where nothing stays static for very long. This state of constant change requires a more active role in managing your personal finances, and at the very least having regularly scheduled financial reviews.
While there is no shortage of news and information, when it comes to market risk, there will always be an unknown factor. So, how do we mitigate the unknown? By taking control and staying informed, vigilant, and focused. It’s important for those at or nearing retirement to approach the market differently than they had earlier in their career. Focusing on the preservation of principal is key because as you age, you most likely cannot afford to suffer a double-digit loss in your retirement funds. You may not have the ability to make the money back and cover expenses, so now is the time to fine-tune your spending, saving, and expectations to best protect your retirement income.
If you have concerns about your exposure to market risk, then it may be a good time to schedule a complimentary, no obligation financial review. We do them regularly to help people better understand the current state of their finances and determine whether they’re still on track for retirement. It’s also a great time to do a risk assessment to see if your current portfolio allocation is in sync with your risk tolerance. Having confidence in your retirement plan will help you to stay focused and eliminate panic when market volatility strikes.
So, if you’re concerned about market risk, then take control by arming yourself with information. And remember, we’re always here to help guide you along the way. We’ll discuss how we can design a customized plan to help you achieve your retirement goals without taking unnecessary chances or risks.