I am sure that the downward trend in the stock market hasn’t escaped your notice. The question is: to what degree does it impact your life in retirement? And how do you deal with the internal turmoil and fear that radiates from your statement to your brain?
Let’s start with some basic ideas.
First, everyone’s risk tolerance is different. What makes one person nervous and upset doesn’t phase someone else. Second, bear markets and recessions are as normal as up years and flat years.
Third, emotions and feelings are important to understand but should not sway your decisions in creating a sustainable flow of resources during retirement.
So, what can you do about it?
- Begin with assessing your current financial position, level of spending and how your nest egg is currently allocated (equities, bonds, level of diversification and costs).
- Work with a planner who is a fiduciary (acts in your best interest) and can help guide you. Make sure you know whether there are any conflicts of interest between the planner and the advice provided.
- If you do not have a written road map (aka a financial plan), put that on the top of the list. After all, your financial well-being is more than just your portfolio.
- Dig into the variables. For example, how does a recession impact your long-term success? Is your level of spending sustainable? What situations could materially impact your security?
This is not a time to panic, but it might be time to make some changes if your current plan is not aligned with your values. Think about what’s most important to you and make sure your financial roadmap reflects that clearly.
