Gibson

Anyone who’s retired in the past 10 years has been very fortunate. They’ve experienced a massive bull market and they may even have a higher net worth today than when they retired!

But it won’t always be that way. Some people will have the unfortunate luck of retiring right into the teeth of the next bear market. Here are 4 things you can do right now to help ensure you survive a market meltdown that occurs during your retirement years.

1. Review your budget.

Market corrections make us feel powerless. Events in London, Wall Street or even the other side of the world suddenly seem to have more control over our finances than we do. That’s a scary feeling, especially if you’re on the cusp of retirement or newly retired.

Here’s a key to always remember—the single most powerful adjustment you can make to your financial plan is controlling how much you spend and save.

If you’re a new retiree or about to retire and you need to fund your retirement from a mix of savings and pension pots, your budget should already be set by the annual withdrawal rate we discussed. Depending on the particulars of your portfolio, your and your spouse’s ages, and your retirement goals, we might consider withdrawing less than that amount at the beginning of retirement while the market adjusts. In other cases, we might recommend sticking with your withdrawal rate but putting more of that income into your emergency savings account.

It’s also a good time to give that budget another once-over. Do any non-essential items jump out at you? Do you really read all those magazines or watch those streaming services you’re paying for every month? Are you going to keep going to that country club now that you’ll be travelling more and focusing more time on your hobbies? How much are you going to drive that extra car now that the kids are out of the house? Speaking of the kids … are you still paying their mobile phone bills? J

Ironically, how you handle these monthly expenses you might not think about much could have a bigger impact on your retirement plan than the scary market headlines you’re reading!

2. Reconsider your investments.

As you get closer to retirement, we will be making carefully considered adjustments to your investments.

As we’ve discussed, it’s best to use a very wide perspective when making a financial plan. Yes, as you get closer to retirement, that lens narrows from fifty or sixty years to twenty or thirty. But over the course of your retirement, we want your assets to continue to earn income for you and keep you comfortable. We will find the right mix of investments to make that happen during this correction, and the next one.

3. Earn more.

Many new retirees find that taking a part-time job gives their days more structure and their lives more meaning. This might be the perfect time to take that voluntary job you couldn’t afford to work when you were raising a family. Teach, tutor, or give seminars that bring your professional expertise to a paying audience. Become a consultant. Or start your own dream business.

The extra income will make you feel a little more secure. The activity and engagement with other people could become the foundation of a rewarding retirement.

4. Keep living your best life!

If the key to a fulfilling life was earning money, then no one would ever retire. And if the key to a fulfilling retirement was having enough money to pay for essentials, then managing market volatility would be easy. Cancel your holiday! Sell your second house! Get a refund on those golf lessons!

Don’t do things like that.

The things you want to do and the people you want to do them with ARE the essentials to living your best life possible in retirement. Even if we decide to trim your budget or rebalance some of your assets, you deserve to enjoy yourself, no matter what the FTSE 100 says.

Call us and let’s make time to discuss what’s actually happening in the markets and what moves – if any – we should consider to keep you on track for a long and happy retirement.