How to Cope With Stock Market Losses in Retirement

I’d like to share with you how to cope with Stock Market losses in retirement. So the main thing that comes to my mind here is trying to avoid the emotional investment decisions. As you can imagine, if you’ve been invested in the market over the past 10, 20, 30, 40 plus years, you’ve experienced some highs and lows of the market. And it’s a lot of those times when the market has been taken quite a hit and everything, that people start to think is now the time I should completely get out of the market? And so again, I encourage you if you’re having those type of emotional responses, maybe it’s time to revisit that with your Advisor or reach out to us here at Centennial Wealth to talk through in greater detail where you are and what you’re trying to accomplish. Another area to talk about is creating a cash reserve or maybe a, say I call it sort of a conservative bucket where if you’re looking at drawing income from your portfolio, you ideally don’t want to have that piece of the portfolio out with a great amount of risk. You want to have that either in cash or a more conservative structure. So that if you’re taking that income say over the period of the next few years, okay that piece of your overall retirement plan isn’t exposed to as great of risk of loss. And in other areas leading up to retirement, this concept of shifting from what we would look at as sort of your growth and accumulation phase to more of a preservation of wealth and income phase. So if you’re still in those working years, you’re just plugging money into your retirement plans trying to get the maximum amount of growth as you can. So that way then when you retire, then it’s probably a time or even leading up to that where you want to be looking at more the idea of how do I protect what I have, still make reasonable interest, but then I want to start generating an income stream. So you don’t want to be again, exposed to those great amounts of losses when you get to those retirement years. And that’s another thing to consider is, it doesn’t necessarily mean that you want to eliminate all the risky investments from your portfolio. You’re going to probably want to continue to take some level of risk, just especially considering where inflation stands and what that looks like say, over the next 20, 30, 40 years of your retirement. But again, it comes with maybe taking calculated risks with the portfolio and with reasonable amounts of the overall mix. So again, I visualize this sort of bucket idea where you might have your short-term assets that you plan on drawing from for a period of time. You might have maybe some that’s going to be mid-term or out there a little ways. And then you might have a bucket that’s going to be more of your long-term growth, that you don’t plan on touching for 10, 15 plus years. So again, diversification is going to be key. If you have questions about all this, we welcome you to give us a call here at Centennial Wealth Advisory.