Watching the market fall feels different when you are retired. A 15% decline at 40 may look like an unpleasant number on a statement. When that same portfolio is helping pay your bills, it can feel much more immediate, which is why market volatility can be such a difficult test for Springfield retirees. Downturns do matter, but it’s important to avoid allowing short-term uncertainty to derail a retirement strategy built for decades. Here are five mistakes worth watching for.
1. Turning a Market Decline Into a Permanent Loss
Selling investments after a sharp decline may provide emotional relief, but it can also lock in losses that otherwise had the opportunity to recover. Markets do not recover on a predictable schedule, which makes the decision even harder. Before making a significant change, retirees may want to ask whether their long-term goals, income needs, or risk tolerance have actually changed—or whether the market simply has.
2. Waiting Until a Downturn to Think About Cash
Liquidity can become especially important once you’re regularly withdrawing money from a portfolio. Depending on individual circumstances, maintaining an appropriate reserve of cash or other relatively stable, liquid assets may reduce the need to sell investments during an unfavorable market. Some retirees consider keeping enough accessible assets to cover a period of anticipated expenses, although the appropriate amount varies considerably by household. This is one reason retirement income planning should happen before volatility does.
3. Getting Out and Waiting for the “Right” Time to Return
Selling is only half of a market-timing decision. You also have to decide when to buy again.
The second decision can be surprisingly difficult. A rebound may begin while the economic news still sounds terrible, and waiting until conditions feel comfortable could mean missing part of the recovery. Rather than attempting to predict short-term market movements, a financial advisor can help evaluate whether your existing allocation continues to reflect your objectives.
4. Rewriting the Plan Every Time the Market Changes
Volatility can reveal useful information about your actual tolerance for risk. If normal market movements are creating serious anxiety, your portfolio may deserve another look. On the other hand, repeatedly shifting between aggressive and conservative positions based on recent performance can create a different problem. Periodic rebalancing or adjustments may be appropriate, but those decisions should generally reflect your financial circumstances and long-term strategy rather than fear about this week’s headlines.
5. Fixating on Your Portfolio
Checking an investment account several times a day won’t provide more control over the market. It may, however, make temporary fluctuations feel enormously important. For Springfield retirees with a carefully constructed financial plan, stepping away from the minute-by-minute changes may make it easier to keep short-term market movements in perspective.
Call Before Volatility Changes Your Retirement Plan
When markets get uncomfortable, you don’t have to make major investment decisions alone. The advisors at LaTour Asset Management of Springfield can help you evaluate market volatility in the context of your retirement income, risk tolerance, investment allocation, and long-term goals. Before fear or uncertainty prompts a major portfolio change, call us at (877) 888-5724. We can help you better understand your options and make your next decision with greater confidence.
