Tips for Retirees Worried about Today’s Market Volatility

It’s important for retirees, or soon-to-be retirees, to have a plan and stick with it, especially during a time like this. Your retirement plan is even more important when the markets are being driven by unpredictable and likely short-term events.Whether you are a few years out or in the early days of retirement, here are five tips for navigating turbulent waters that won’t require you watching stock prices all day long

Understand how much guaranteed income you have

It’s rare that all of your retirement savings are linked to the markets. In fact, most retirees have a combination of Social Security, annuity and sometimes pension income that can provide a cushion against market volatility. Luckily, your Social Security and pension are not linked to market movements. In addition, if you have a fixed annuity, it can provide you with predictable returns that are non-market related. These sources of guaranteed income can quickly add up.

Check your stock-to-bond ratio

Your stock-to-bond ratio is one way to make sure you are comfortably navigating through market volatility. Particularly in the early years of retirement, it’s not uncommon for individuals to de-risk their portfolios modestly as they settle into their new retiree lifestyle. This typically means selling stocks and buying bonds instead. As retirement spending and lifestyle become more tangible and clear, refocusing on the long-term plan can make sense.

Invest for the long term

Long-term investing isn’t just for millennials. Baby boomers are looking forward to lasting 25+ years in retirement. Thus, giving boomers more time in the market can help them extend the life of their portfolio. The SECURE Act, which passed at the end of 2019, gives retirees who have part-time income additional opportunities to save for retirement. Also, if you are over the age of 50, don’t forget catch-up contributions to your IRA! You can contribute an extra $1,000 a year, up to a total of $7,000.

Minimize Your Fees

In addition to the market’s volatility, are hidden fees draining your retirement savings? While there are many factors to take into account when choosing your investments, it is important to keep an eye on fees. Today’s investors have more high-quality choices at lower costs, but too often fees can be confusing and opaque.

Don’t overpay (retirement) taxes

If you have retired and started to withdraw from your retirement savings accounts, keep an eye on the new set of taxes you will face. If you are like many Americans, you have likely saved for retirement across several accounts, which have different tax statuses. For example, Roth IRAs have tax-free distributions, but traditional IRAs are taxed at your income tax rate.

https://www.kiplinger.com/article/retirement/T047-C032-S014-5-tips-for-retirees-worried-about-stock-volatility.html