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I’m retired. What should I do when the Dow is down?



You’re retired. What should you do when the Dow is down?

I have a 17-year-old daughter, and I’m often telling her not to worry about the typical issues that plague teenagers.

My daughter hates it when I give her this advice.

“Mom, you can’t tell me how to feel,” she says. “I feel what I feel.”

And she’s right.

The same is true if you’re retired and you’re worried about the recent volatility in the stock market. Financial experts are telling investors not to panic. For many people with years to go to retirement, they can stay the course with little concern. Investors are told.

But if you’re retired, you may not be feeling this advice. So feel what you feel. It’s fine that you’re concerned. Yet you still have to separate the fear you may have with any action you take. Don’t lock in losses by selling in a panic. Or don’t just stay the course if you’re being too risky by having too much of your portfolio in stocks.

Here’s a question sent to Walter Updegrave, editor of RealDealRetirement.com back in January when the stock market looked golden.

Q: I’m well into retirement age, although still working, and have my nest egg of about $500,000 invested entirely in stocks. But I’m getting worried about the future of the economy and the market. Should I transfer everything to a safer investment?

Updegrave: “I think you’re absolutely right to question whether keeping 100 percent of your retirement stash is the right way to go at your age, or for any age at that matter. Yes, the market has given us a terrific ride, with stock prices more than quadrupling since they bottomed out in the wake of the financial crisis. But even though we don’t know when this bull run will end, we know it will at some point.”

And end it did.

Here’s a story that ran last week: Stock and bond markets are doing a strange thing that is reminiscent of the 1987 crash

“The S&P 500 fell officially into correction territory on Thursday, down more than 10 percent from its record reached in January,” CNBC’s Tae Kim wrote.

By Friday there was this: Dow surges at the finish in a week of heavy losses

“U.S. stock markets seesawed again Friday, capping a head-spinning week that wiped out as much as $3 trillion in U.S. stock market value as investors fled from equity funds,” The Washington Post’s Steven Mufson and Emily Rauhala reported. “Investors, who in January set a monthly record for sinking money into equity funds, pulled their money out at a record pace in the week ending Feb. 7.”

Read Updegrave’s answer to the retiree: Should I move my retirement savings out of the market?

Two very important points Updegrave made in this column.

1. “I don’t think the answer is making a move as radical as shifting your entire nest egg into a safe haven. One reason is that, for all you know, making such a move now could be way premature. Over the past several years, Cassandras have predicted the imminent collapse of this bull market for a variety of reasons — the downgrading of U.S. Treasury securities in 2011, Brexit in 2016, the election of Donald Trump — and yet it’s still going strong. If you abandon stocks every time you get jittery about the economy or the financial markets, you may lose out on some impressive growth in the value of your savings.”

2. “Another reason I’m not a big fan of investors fleeing to “safer investments” is that the investments they chose sometimes aren’t as safe as they think they are. I find that when people are skittish they often gravitate toward gold, which can be just as volatile as stocks, or they’re vulnerable to pitches for expensive annuities or investments that purport to offer high yields and safety but come with other risks.”

Read more: How To Handle A Stock Market Drop When You’re Retired

Read more: Should Retirees Avoid the Stock Market? Although they can be quite volatile, stocks are still an essential part of any retiree’s investment portfolio.

Your thoughts
Are you scared about the stock market gyrations? Have you made any moves to shift your investments? If so, what did you do? Send your comments to colorofmoney@washpost.com. In the subject line put “Stock Market.”

Retirement rants and raves
I’m interested in your experiences or concerns about retirement or aging.

This space is yours. It’s a chance for you to express what’s on your mind. Send your comments to colorofmoney@washpost.com. Please include your name, city and state. In the subject line put “Retirement Rants and Raves.”

Last week, I asked you to take Fidelity Investment’s retirement readiness test and tell me how you did.

Read more: What’s your retirement readiness score?

Here’s how some of you scored.

“My score from Fidelity is 74, but I have a problem with the calculator,” wrote M. W. Richard of Portsmouth, R.I. “It bases my needs on my current income, but I save more than half my monthly income. I believe my retirement income should be based on what I actually spend now, not what I earn.”

Vickie Wilkins of Orange County, Va., also had an issue with the test, writing “My score was a 69 but did not take into account the two pension checks I currently receive. How do I make the calculator work to include that income?

The Fidelity assessment ask you to input your age, current or most recent income, retirement savings 401(k)s,IRAs, etc., plus any employer contributions.), how much you save every month for retirement, and how will your standard of living change when you retire. You’re also asked to indicate your investment style.

Jim Argent of Pewaukee, Wis., had a score of 150+, he said. “I am Happy, but I usually am.”

Jana from Baltimore, Md., wrote, “My score was 93. I’m pretty pleased with it, but I still don’t feel prepared for retirement. I don’t think I have enough money saved, but I’m also not thinking of retiring soon. I’ll wait until I’m 65 and then make a decision. Thankfully, I have time.”

Tammy Ramsey of Olympia, Wash., wrote, “I scored a dismal 62 (at age 44) and am worried. But, it just feels like an insurmountable problem to save more. Just have to keep plodding away and hoping we can make catch up contributions when we stop being parents full-time.”

I try a lot of different retirement calculators, some are better than others. But the point is run the numbers through various tools. Each one can give you some information to help you plan for retirement.

Read more: Retirement Calculator Reviews

Newsletter comments policy
Please note it is my personal policy to identify readers who respond to questions I ask in my newsletters. I find it encourages thoughtful and civil conversation. I want my newsletters to be a safe place to express your opinion. On sensitive matters or upon request, I’m happy to include just your first name and/or last initial. But I prefer not to post anonymous comments (I do make exceptions when I’m asking questions that might reveal sensitive information or cause conflict.)

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