Will You Retire in an Uncertain World?

We’re living in unprecedented times, and the government is taking unprecedented actions to mitigate the damage done by the coronavirus. While strict measures like canceling events of more than 10 people, closing bars and restaurants, and restricting travel are meant to help from a public health standpoint, they’re also having a crippling effect on the economy. The Federal Reserve and the government are working to help the economy, but the results are uncertain.

Some kinds of uncertainty are good, like when you don’t know what will happen next in the movie you’re watching. But when it comes to the stock market, uncertainty is less desirable. You may have to ask yourself if you will retire in an uncertain world, and what you should do. Those nearing retirement should beware of sequence of returns risk, for instance. The state of the market just before you retire can impact your returns through your entire retirement. This is because once someone takes withdrawals from a fund’s underlying investments, it can be hard to regain ground without contributing more money.

This is one reason why you might want to reduce your investment risk as you near and enter retirement. Staying calm in unpredictable markets may be something you’ve done before, but it can be harder to do once you’re retired. If you don’t know all your options for protecting what you’ve earned in an uncertain world, a financial advisor can tell you.

Some things you might consider when assessing your level of investment risk are how much retirement income you would need to cover basic expenses like housing, food, and medical care. Also consider keeping an emergency fund for things like home and car repairs, and medical emergencies. Knowing that you’ll be able to cover these expenses in the event of a market downturn can be an important part of a retirement plan designed to take you through the next 30 plus years of your life.

Retirement should be a time of relaxation, and not just because you won’t be working anymore. Your mind, as well as your time, should be free from constant worry. If you’re worried about how the ups and downs of the market could affect your retirement, talk to us. We can help you create a custom retirement plan with your unique concerns in mind so you can pursue retirement in an uncertain world.