Some retirement investors have a portion of their investment in stocks, and this may have served them well. Stocks have recently been on a roll - and many are near all-time highs. Some investors may think the market is a bit extended. Aside from relying on luck, what could you do to prepare your retirement nest-egg for the next downturn? Practical tips that you can evaluate and easily implement were provided recently in a Money Online article written by Walter Updegrave. Let's take a look at the planning he suggests:
Steps To Take Before The Next Market Correction
- Review Your Stock Holding Allocation
Could you be too heavily weighted in stocks? Some may recommend a high percentage of stocks, say 60 to 70 percent, in your investment mix when you are young and just starting out is fine. Perhaps that may be a good strategy for some to begin with that allocation, but as you near or are in your post-working life, a smaller percentage may be more prudent. There is no single stock or fixed-income mix that is best for everyone. When the bear growls, you want to be sure your retirement nest egg is protected. Having a nice percentage of your investment mix safely in cash may not only dampen the volatility of your portfolio, but may give you some dry powder to buy if stocks become really cheap.
- Tweak Your Budget
While you are at it, think about your overall retirement budget. It can be as simple or as elaborate as you like. Pay special attention to such things as health care and insurance as well as prescriptions drugs, which may cost more as you get older. Conversely, the amount of money you spend on clothing for work or gas for commuting may decrease.
- Can You Generate Other Income?
If your evaluations indicate you may not have enough saved, consider a side-gig after leaving full-time employment. Many folks find that freelancing, consulting, or other such endeavors not only bring in extra dollars, but they are fun and keep the mind sharp.
- Remember: Patience and Preparedness Go A Long Way!
Finally, it may help to work with an Advisor that can help you strategically position your retirement portfolio. Also, exercising patience can be a virtue as well. Position your portfolio well and realize all down markets are followed by the inevitable upswing.
Having a strategic plan and some cash may help you feel more comfortable with the retirement road ahead. We are here to help you navigate your journey.