By Brian Bloxom, ChFEBCSM
The coronavirus has effectively ruined 2020 for most of us. It’s caused us to worry about our health, our jobs, and the safety of our loved ones. It’s ruined travel plans, weddings, and graduations. And it’s sent the U.S. economy into turmoil, resulting in millions of Americans stressing about their financial security. In fact, 70% of pre-retirees in their 50s are more anxious about their retirement plans this year than they were a year ago. (1)
Questions that many pre-retirees and retirees alike are sadly now considering include:
- Will my investments recover from the major stock market hits in February and March?
- Is my current retirement plan still feasible?
- Will I have to delay retirement and work longer?
The answers to these questions depend on many factors. We’ll address a few common questions in this article, but it’s important to contact your financial advisor so that you can evaluate your plan together and prepare for any changes you might need to make in the face of the global pandemic.
Will My Investments Recover?
When facing a bear market, financial advisors and professionals often remind their clients that historical data is an investor’s best friend. In American economic history, a bear market has always bounced back.
In fact, the market has made significant gains since the drastic losses in February. In early August, the S&P 500 actually returned to pre-pandemic levels. This gain doesn’t tell the whole story, as the majority of stocks in the index still hadn’t fully recovered losses, (2) but it does provide some much-needed reassurance that this recession, like all other recessions, won’t last forever.
Also, research shows that the more often you check on your investments, the more likely you are to make irrational financial decisions that negatively impact your investments and financial security. (3) Don’t let fear control your decisions. Your best strategy is to resist the temptation to check on your portfolio frequently, especially during periods of market volatility. Trust history, trust your financial advisor, and remember that the market will always, always bounce back.
Is My Current Retirement Plan Still Feasible?
In the face of so much uncertainty, it’s normal to worry that your current plan is now at risk. But you’re not likely to need your retirement money for years. Even if you’re already taking withdrawals as income or plan to start soon, you won’t need access to everything you’ve saved right now. You will need that money for the next 10, 20, 30 more years, so in many cases, you can afford to wait out the markets, because they will go back up as they always do.
To better protect yourself from fluctuating markets during this chaotic period, your financial planner can help you to strategically manipulate your investment positions so that a certain number of years’ worth of income is safely held in cash and cash equivalents. Then the rest of your retirement money is better situated to ride out the market swings.
Your financial planner is the best person to contact when you think that your current retirement plan may need to be reviewed. If you’re worried about having to work longer, or you’re reevaluating decisions such as when to apply for Social Security benefits, we can help you look at your total picture (as we always do) before you decide to make any drastic changes.
How We Can Help
At Sentinel Wealth Partners, we understand the stress and anxiety that volatile markets can cause regarding your retirement savings. We are committed to helping you make decisions based on objective, historically driven guidance. We will approach your concerns from an objective standpoint that is not guided by emotions and find the best options for you.
What’s more, we’re committed to being there for you at all times, day or night. If you’re concerned or unsure about how the coronavirus may be affecting your retirement plan, please reach out to us. You can reach our office at (703)-832-0164, or email us at [email protected].
About Brian
Brian Bloxom is an Independent Financial Advisor, Chartered Federal Employee Benefits Chartered Retirement Planning Counselor (CRPC) and Consultant (ChFEBCSM) with 25 years of experience in financial advising. He founded Sentinel Wealth Partners to serve retirees, individuals approaching retirement, and individuals managing complex retirement plans such as company plans or federal benefits plans. His expertise and dedication to helping his clients achieve their goals make him a trusted resource that will help you feel confident in your customized retirement plan. Brian’s mission is to be available to his clients—all the time. He’s here to solve your problems, relieve your anxiety, and give you optimism for retirement. Because ultimately, your retirement should be about well-deserved enjoyment, and not about stress or anxiety. When he’s not working, you can find Brian spending time with his wife, Jessica, and their two sons, Spencer and Preston. He enjoys coaching soccer, serving in his community, golfing, and relaxing at his vacation home at Lake Anna, VA. To learn more about Brian, connect with him on LinkedIn.
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(1) https://www.simplywise.com/blog/retirement-confidence-index/#methodology
(2) https://www.cnbc.com/2020/08/22/coronavirus-most-stocks-havent-recovered-despite-sp-500-record.html
(3) https://academic.oup.com/qje/article-abstract/112/2/647/1870948