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Retiring in an Uncertain Market

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You’ve worked hard for many years, and you’ve done a good job saving and investing. You’ve got a long-term financial plan for your retirement, and the time has come to step away from the daily grind and start enjoying more time spent doing the things that are most important to you. But the market looks iffy right now, and you’re wondering if this is really the right time to walk away from that regular paycheck.

If this sounds familiar, you’re in good company. In fact, during 2020, according to Pew Research, more Baby Boomers retired from the work force than any year in the past nine and at more than double the rate in 2019. When the market is gyrating, the uncertainty can make it seem like giving up that regular income is a bad idea. But if you’ve got a solid financial plan for your retirement, that probably isn’t the case.

It’s All about Your Planning

A professional, fiduciary financial advisor can help you develop a plan for your retirement that takes into consideration the certainty of market volatility. Notice: we said “certainty,” not “possibility.” That’s because the financial markets are impossible to predict, and large price swings are part and parcel of the functioning of efficient markets as they digest millions of pieces of data each day, including unexpected events (like the emergence of a global pandemic, to cite a recent example). A professional advisor will guide you in constructing a plan that factors in this volatility, along with your individual risk tolerance, the number of years you’ll need your investments to provide income, and all your other resources. The goal is to give you a roadmap for retirement that is stress-tested: reliable and capable of providing for your needs in good markets and bad.

Focusing on What You Can Control

Another benefit of working with a professional financial advisor is the help they can provide in keeping you focused on the factors you can control. Instead of trying to anticipate future market movements—which no one can predict, let alone control—your advisor will help you stick with your plan and make the necessary adjustments as market conditions evolve: tax-loss harvesting, rebalancing your asset allocation, and favoring tax- and fee-efficient strategies and investments to help you keep more of your money working for you.

Tips for Keeping Your Cool

It’s also important to keep in perspective your total picture as you enter retirement. Here are four ideas to help you maintain focus on the big picture, even when the markets are acting up.

1. Know your sources of guaranteed income. Social Security, pensions, and annuities provide guaranteed income that is unaffected by market movement. In fact, these three sources provide significant portions of many retirees’ monthly income.

2. Review your asset allocation. For many retirees, stocks are only a portion of their investment portfolios. That means that even though equity prices may be moving widely, much of the portfolio will be less affected. This also points out the importance of holding a well-diversified portfolio—another advantage of working with a professional, certified financial advisor.

3. Stay focused on the long term. The year just past offers an instructive example of the value of keeping your long-term horizon. Starting in February 2020, the stock market went from an all-time high to a drop of more than 30%, followed by a recovery to new all-time highs, all in less than 12 months. Those who remained patient and focused on their long-term strategy generally fared well, even in a turbulent year. Don’t let short-term volatility short-circuit your solid strategy.

4. Review your withdrawal strategy. A professional financial planner can help you devise smart strategies for drawing down your retirement funds, stretching your savings even farther and often saving you on taxes, to boot. 

If you’ve done the work, developed a sound strategy, and obtained solid, professional advice, market volatility isn’t necessarily a reason to delay your long-anticipated retirement. We work with our clients, both in and nearing retirement, to develop personalized roadmaps designed to lead you into and through a satisfying retirement lifestyle. If you would like to learn more about how our fiduciary guidance could work for you, please contact us.  To read our article, “What to Consider when Choosing a Financial Advisor,” click here.

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