Many retirees and those nearing retirement are expressing concerns about rising inflation, layoffs, and market volatility. Despite the anxieties troubling investors, advisors recommend maintaining a cautious and flexible approach during market dips. Such strategies may include protecting capital, managing withdrawal rates, and avoiding panic-driven decisions like selling investments.
In a recent article, Matthew Cleary emphasized the importance of maintaining a healthy cash reserve during retirement, especially in volatile markets. By using cash instead of selling investments in down years, retirees can avoid locking in losses and reduce the impact of what's known as "sequence-of-returns risk." This refers to the fact that the timing of investment returns can largely impact how long one's retirement savings last.
He also stresses that retirees need to be cautious about how much they withdraw from their portfolios. To ensure long-term sustainability, both withdrawal rates and investment choices should account for potential market ups and downs.
Interested in learning more? Read the full Financial Advisor Magazine article here.
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