WITH STOCKS STILL NEAR THEIR HIGHS WHAT SHOULD RETIREES DO NOW?
Although the stock prices are trading near their all-time highs, it hasn’t exactly been a joy ride for retirees who are counting on their retirement plans for a lifetime of income. The type of unruly market action that we have seen over the last few months always unleashes a flurry of “expert” commentary that seems to be directed at those who are most vulnerable to flash declines.
Specifically, the pundits are talking to those investors who are now relying upon stock market returns to feed their incomes and instilling doubt over their investment strategy.
Many of these financial gurus have suggested those who are nearing or in retirement should not be invested in the stock market. While this opinion is widely heeded during times when the stock market plunges several percentage points day after day, it would be important for retirees to consider a longer-term perspective.
People turning 65 years old today can expect to live 25 or 30 years or more in retirement. It is, therefore, a necessity to employ an investment strategy that will increase the market value of the portfolios over time while minimizing the loss of capital. That was an easy order to fill in over the last six years, but as the stock market approaches new highs, retirees need to consider their withdrawal strategies in the context of their specific income needs.
Retirees who are not taking withdrawals
If you’re not taking withdrawals due to receiving a pension, Social Security, or another form of income, you should (but probably won’t) feel a bit better than others. Any decline in the stock market can affect your portfolio, but, at least for now, it will not affect your paycheck. If your portfolio is diversified, and you continue to make adjustments to ensure your portfolio stays diversified, it should be able to weather the ebb and flow of the market.
Should you ever need to make a withdrawal, you should have portions of your portfolio that can be liquidated, which will not result in having to buy high and sell low.