Stock Market Affecting Retirement Planning

What to Do If the Stock Market Has Derailed Your Retirement Plans

Updated on Jan 07 2019


If you are approaching retirement and are experiencing angst from the stock market volatility, it’s important to not panic. Here are top tips to achieve a successful investment portfolio for retirement planning under any market condition.

There’s no doubt that the recent tumultuous activity of the stock market has captured your attention. With rumors brewing that the 9-year bull market is coming to end, the stock market may be affecting your retirement plans in a negative way.

Be Proactive with the Stock Market and Your Retirement Planning

Financial experts say nobody should make quick reactions to the volatility of the market just yet, and that it’s important to give the market time to work itself out. But, for those seeking retirement sooner rather than later, just ‘riding out’ the market does not always work.

So, what do you do if the stock market is affecting your immediate retirement planning? Here are steps to take right now that can set you up for better financial health.

5 Steps to Get Your Retirement Plans Back on Track with Stock Market Volatility

According to a survey from SEI Investments Company, 77 percent of financial advisors expect a market downturn sometime in the next two years. Instead of panicking about your investment portfolio and retirement plan, here are 5 steps to set yourself up for success if the stock market is affecting your retirement planning.

1. Don’t panic.

Take a deep breath and know that market movement is very normal. Currently, the market is far from a 10 percent correction. Avoid alarming headlines and take appropriate steps to protect your investments and increase contributions.

2. Evaluate your spending.

The New York Federal Reserve found that nearly 66 percent of Americans do not have a budget. The same percentage says they would have trouble paying $2,000 in case of an emergency. Create a budget and explore eliminating those hidden spending costs that can really add up like cable TV subscriptions, dining out, or data plans.

Creating a budget now can also help you understand what costs you will need to cover for retirement and give you a more comprehensive view of where your money is being spent.

3. Invest and save more.

An analysis by the Investment Company Institute found that of the 150 million employed Americans, only 54 million put money into a 401(k). It may seem counterintuitive to invest more in a volatile market, but now is the time to sign up for a retirement account and invest as stock are “on sale” when the market is down. Try to cut current spending to max out any employer contributions to make the most of your retirement planning.

Additionally, open a higher-interest savings account. If you have an emergency cash fund, setting up an online bank account with a higher interest is an easy way to increase interest earnings.

4. Pay off debt.

Instead of worrying about what may or may not happen with the market, focus on paying off your debt. Paying off debt can free up your finances and make you more resilient to the ups and downs of the stock market.

Paying off credit card debt is a simple way to save money as many credit card accounts charge interest rates of 20 percent or greater. Paying off student loan is another great way to eliminate debt. Even though student debt usually has a lower interest rate, paying off debt gives you a confidence boost and a guaranteed high return - which is more than what is guaranteed from the market.

5. Contact a Fiduciary Financial Advisor

A fiduciary financial advisorfinancial plan is legally and ethically obligated to place your interests above his or her own interests - even when those conflict. They are a trusted and steady resource in the ups and downs of the market and can help you understand the role of the stock market in your financial plan.

Has the stock market affected your retirement plan? Are you making appropriate changes to ensure a successful financial plan despite the downturns in the market? Contact a financial advisor today to conduct a financial assessment and make your retirement portfolio more resilient to the stock market.

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