Retirement Planning During Volatile Market Conditions

Focus on the strategy, not the noise

In times of sudden market downturns, and in this new COVID-19 economy, I am reminded of Rudyard Kipling’s advice to “keep your head when all about you are losing theirs.”  I do this by focusing on each client’s individual investment strategy, not the noise. For instance, I may counsel a 40-year-old client with a 25-year time horizon to increase their 401(k) contributions to take advantage of the fire sale offered by the market.

However, more typically, I am counseling a client approaching or in retirement. When talking with these clients, I often refer to different pools of assets as “buckets.” I will remind them that their first bucket is cash, which has been set aside as their emergency fund. The second bucket consists of bonds or income-type investments with enough assets to fund, ideally, seven or more years of retirement income needs. This bucket can fluctuate in value day to day, but typically the fluctuations are minimal.

Focus on the investment strategy, not the noise.

The final bucket contains stocks for growth and to hedge against the effects of inflation. These assets are earmarked for long-term needs. Although this bucket can swing wildly in the short term, our focus is on the long-term positive trend line. Periodically and over time, we will rebalance the portfolio by paring down their stock exposure on strength rather than emotion. This allows us to replenish the emergency and income buckets.

If the first two buckets are funded properly, they provide a cushion that allows our clients to be patient and comfortable with their long-term bucket in times such as these.

If you have been working with a financial advisor, do make time to review your current financial plan with your advisor in order to assess if you are well positioned for market volatility or if a rebalancing of your portfolio is necessary. If you are not working with a financial advisor, this is the time to seriously and actively seek the advice of a trusted financial advisor. Our advisors are here to assist you with the current market situation and to guide you to be prepared for the next financial crisis.

Give us a call.  We are here to help.

(412) 630-6000
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Contact Alison F. Wertz, CFP® CLU®

North Hills Address
107 Mt. Nebo Pointe
Suite 200
Pittsburgh, PA 15237
South Hills Address
740 Washington Road
Mt. Lebanon, PA 15228

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