Now that you’re nearing retirement, the term “market volatility” might stir up different feelings than it did 30 years ago. Older workers and retirees understand that they have less time to make up for losses in their investments and to ride out future market crashes than they did when they were younger. Leaving your financial well-being up to the whims of the market seems like less and less of a good idea as you get closer to retirement. So, what could cause market volatility, and how do you handle it?
Federal Reserve, Interest Rates, and the Market
The Federal Reserve recently stated that it expects to soon raise the federal funds rate in response to surging inflation. While this could help slow inflation, it could potentially lead to a volatile market. After the record highs we saw in 2021, this year may be a different story. The market could potentially not respond well to the Fed tapering its asset purchase and raising interest rates multiple times in 2022. The Fed could raise rates higher or faster than originally expected in order to curb inflation, and this uncertainty could mean poor market performance.
Tips for Handling a Volatile Market
DON’T withdraw early from your 401(k) or IRA. While this might seem tempting during volatile periods, it’s typically not a good idea to cash out of your 401(k). If you withdraw money before age 59 ½, you could have to pay the early withdrawal penalty of 10%.
DON’T make decisions based on emotions. This can be an easy trap to fall into when your financial security is at risk. You may want to pull all your money from the market when it drops in an attempt to save your investments, but it may be wiser to allow time for the market to recover.
DON’T get freaked out by the news. While it’s important to know what’s going on, there is such a thing as being too glued to media. Headlines often report a worst-case scenario or even exaggerate in order to get as many eyes as possible
DO get information and make a plan!
We can help you with that – sign up for a time to meet with us to discuss what to know about investing in retirement. We can look at your risk tolerance and your retirement lifestyle goals and help you create a financial plan for the future. We can take the time to listen to your concerns and decide on a path forward that fits you specifically.
Because investor situations and objectives vary this information is not intended to indicate suitability for any individual investor.
This is informational purposes only, does not represent legal or tax advice, does not indicate suitability for any particular investor, and does not constitute an offer to purchase or sell investments. Investments in securities involve a high degree of risk and should only be considered by investors who can withstand the loss of their investment. Prospective investors should carefully review the “Risk Factors” section of any prospectus, private placement memorandum, or offering circular. The S&P® 500 Index is a widely recognized capitalization-weighted index that measures the performance of the large-capitalization section sector of the U.S. stock market. Direct investment in an index is not possible.
This is for informational purposes only and does not constitute an offer to buy or sell any investment product.
Advisory Services offered through Asset Strategy Advisors, LLC (ASA), a SEC Registered Investment Advisor. Securities offer through registered representatives of Concorde Investment Services, LLC. (CIS) or RCX Capital Group, LLC (RCX), both members of FINRA/SIPC. Insurance Services offered through Asset Strategy Financial Group, Inc. (ASFG). ASA, CIS, RCX and ASFG are independent of each other. All research reports from third parties are for informational purposes only.