The S&P, the Dow, NASDAQ – have lost their gains for the year as of December 27th. Retired clients are nervous about “where will I get income?” As investors we have been counting on gains in value along with earnings to provide income.
Don’t panic
Hopefully, in your account, you have cash reserves if you are currently depending on it for your income. You should have a diversified mix of holdings that fits your risk profile. Most importantly, you should have a financial plan. Retires feel the pressure of market swings acutely, but it’s time to let the plan work.
A lesson from my dad
My father grew up on a farm in Southern New Jersey during the depression. He had stories about working in a bowling alley setting up pins for the players. Stories about picking peaches in the summer, and until he died he couldn't stand peaches unless they were peeled. Apparently peach fuzz is quite itchy. He worked from an early age and an amazing work ethic throughout his life.
At the age of 17 he joined the Navy. It was WWII. He was a Seaman on a Destroyer, the Frankfurter, which the sailors called ‘the Hot-dog.” His ship pushed aground on Omaha Beach on D-Day. He never talked about it until he was in his late 80s and even then, it was too painful. He was left hard of hearing, wearing hearing aids, from the guns he fired, but I know it made him the man he was.
What does this have to do with the market?
Dad believed in being positive and working hard, and he taught me to “make a plan and work the plan.” It worked for him. He built a successful bearing distributorship and worked until he was 75.
Make the plan, work the plan
Everyday as the market goes through vacillations of volatility, I tell myself: make the plan, work the plan. A retirement plan takes into consideration there will be market corrections however painful they might be, and before those corrections take place, it’s important to know you have an asset allocation that fits your level of risk; in other words, a you should have a portfolio that matches your tolerance for risk.
If you don’t have a plan, then let’s make one.
Right from the beginning, it’s important to have clear, serious conversations about retirement goals, how you feel about market changes, and a long-term plan to grow and protect. Let’s have that discussion to put in place your plan.