Navigate the ups and downs with confidence and stay on the right path
Retirement is a time of life that should be filled with enjoyment, relaxation, and the freedom to pursue passions and interests. However, it’s also a time when your financial decisions become more critical than ever.
Life is full of ups and downs – good days and bad, gains and losses – and the same holds
true for your financial situation. The key to navigating these fluctuations successfully is maintaining a long-term perspective.
Life Happens: Embrace the Ups and Downs
As you progress through retirement, you will inevitably encounter days when everything seems to go right, and others when nothing does. Similarly, your investments will experience both gains and losses. These fluctuations are a normal part of life and investing, and they should not be cause for panic.
The important thing to remember is that, with good decision-making, your life and your money will generally move in the “right” direction over the long term. It’s easy to get caught up in the daily news cycle or the latest market downturn, but these short-term events are just blips on the radar of your long-term financial journey.
The Importance of a Long-Term Perspective
When it comes to your money, especially in retirement, it’s crucial to maintain a long-term perspective. For example, a 3% loss to your portfolio might feel alarming, but it’s not the time to panic and sell off investments. Doing so could lock in losses that would otherwise be temporary.
History has shown us that markets have always recovered from downturns, and while we can’t predict exactly when recovery will happen, it’s highly likely that they will continue to bounce back over time. Selling in a panic not only locks in losses but also removes you from the market when it eventually recovers, potentially missing out on gains.
When to Review Your Financial Plan
If short-term losses or market volatility make you uneasy, it’s a good idea to review your financial plan with your advisor. This can help you see the bigger picture and understand how your projected net worth is expected to grow over time, despite short-term setbacks.
Your advisor can provide you with projections and scenarios that demonstrate how your portfolio is likely to perform over the long haul. This can be reassuring and help you stay committed to your financial plan, even during turbulent times.
Staying the Course
Staying the course doesn’t mean ignoring changes in your life or the market. It means making adjustments when necessary but doing so with a long-term strategy in mind. This could involve rebalancing your portfolio, adjusting your withdrawal rate, or reconsidering your asset allocation based on your current life stage and risk tolerance.
However, these decisions should be made thoughtfully, not as knee-jerk reactions to market movements.
The content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. This material was developed and produced by FMG Suite to provide information on a topic that may be of interest. FMeX is not affiliated with the named broker-dealer, state- or SEC-registered investment advisory firm. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security.