It’s no longer news that the coronavirus’s uptick has affected the economy and led to an increase in unemployment. It has also had a significant effect on the stock exchange market, making it volatile since February and leaving investors in a state of uncertainty.
As the pandemic raged, investors have seen a drop in the value of the portfolio, and the challenging part is, there’s little they can do about it. Speaking on the issue, Scott Thomas, principal at Edward Jones in St. Louis, said the market saw a decline of 35% between February and March and is currently up almost 40%.
Even though the financial market has bounced back over the past few weeks, there’s still uncertainty in how things will turn out in the coming months, especially as there’s still no vaccine for the virus.
However, while it may be challenging to stay calm during this period, experts say retirees have to be comfortable with the market’s volatility.
Investors approaching retirement and those already retired are adjusting their investments in response to the market downturn.
Investing in Your 60s
The reaction from older Americans to recent market volatility has been rather balanced. Instead of panicking, many stayed on course with their portfolio investment despite the market downturn.
Pam Krueger, CEO and founder of Wealthramp, a free online service that matches consumers with vetted financial advisors in California, says the reaction of those aged 65 and above has been “pretty rational.”
According to Krueger, a survey of fee-only fiduciary financial advisors’ network shows that more than three of their clients will retire as planned despite the economic downturn.
While this may seem technical, one way to address the realignment is to examine your income versus your expenses. To develop a financial strategy that fits you requires considering those two figures.
According to a financial expert, Thoma, one thing to do in such emergencies is to have a year’s worth of income in cash to match needs and near-term necessity, so no changes are made to the portfolio.
He offered a three-pronged investment strategy for retiree investors, with risk tolerance management at the forefront, followed by considering your short-term and long-term financial needs and, lastly, having a conservative spending plan.
Stick With Your Investment Strategy
If anything, the recent downturn has highlighted the need to plan for unexpected situations and stay on top of your investment strategies.
Tom Zgainer, CEO of America’s Best 401k in Arizona, says investors should make sure that their portfolio is balanced for the next 5 to 15 years. He says that even if the market slants towards a more conservative balance, investors shouldn’t freak out and cash out because they will lose the time and value of money, regardless of their stage of life. This is the best time to take a look at your portfolio and ensure you are on the right track.
Takeaway
Planning for life after retirement requires preparation, dedication, and a bit of sacrifice sometimes. As a retiree, limiting your expenditure and keeping to a budget during a market downturn is as essential as saving in your pre-retirement age. Adopting the right financial habits will help you manage your retirement plans for many years to come.
