Financial markets recently took a massive swing into volatility, with the Dow Jones average fluctuating by hundreds of points in a single day- last Tuesday, the blue-chip benchmark plummeted 1.7%, making it the longest streak of losing sessions since March 2017. Many of those who rely on the market for their retirement funds, especially those close to retirement, are naturally worried about this downturn and what it may mean for those who do not have a lot of time to make up any losses they may incur due to the unpredictable movements of the market.
In this context, it can be hard to remain calm. More than 45 million Americans are over 65, which is typically when the main weight of living expenses tends to shift from active income to savings. In the currently tumultuous financial environment, between Federal Reserve interest rates rising, mounting global uncertainty, and trade wars looming on the horizon, it is important to stay calm and not follow the moods of the market. If you panic and sell based on relatively standard fluctuations, you could lose a large portion of your potential savings.
Money manager John Dorfman believes that markets will remain choppy, possibly even trending downwards, but he maintains faith in the underlying U.S. economy.
Tom McClellan, a market timer, says that the market could remain bearish for as long as four months, bottoming out sometime in August. He points specifically to the continued poor performance of high-yield corporate bonds and high performance in the customer discretionary market as compared to the consumer necessity market. This could spell bad news for those who are only months away from retirement, but historically bear markets are followed by a surging bull market, so there may not be much need to worry if you have a decent amount of time to recover from potential downturns. If you do not, however, shifting funds to gold and silver are typical responses to this situation.
In times like these, it is best to speak with a financial professional, and if you are looking to withdraw your TSP, there are several ways to do it while minimizing financial risk.