For Wall Street, it has been a rough week, in fact, the roughest week since 2008. The NASDAQ, S&P and the Dow are all down due to the Coronavirus that is spreading like an epidemic. The impact is not just seen by Wall Street as markets all over the world are feeling the burden. But what about you if you have money in the market and suddenly the market starts plummeting? If you’re in such a state, the first tip should be to not panic. What would happen if you’re retired or you’re a baby boomer who is nearing retirement? Does the same advice apply to you? Probably Yes.
It will mostly depend on the way your money has been distributed in the financial vehicles and how soon you may need to withdraw the money. The managing director of SFMG Wealth Advisors in Texas, Shashin Shah said that for retirees, the main thing is to ensure they have enough cash to meet their daily expenses. No amount of risk would actually be sensible if the retiree needs money this year or the following year.
Apart from the urgent cash needs, Shah also advises older people as well as the younger people to be brave about the market as the market is all set to bounce back later. No matter which retirement expert or financial planner you ask, this will be the advice for sure. For a person who has retired recently or who’s planning to retire in future, it can be tough enough for you as 2007-2009 is not too long ago. Retirement planners said that they motivate their clients during such a situation. They tell them to remember that just because you’re 60-65 years old, that doesn’t make you a long-term investor.
A person who is approaching his retirement should always plan in terms of decades and not in terms of one year after another, lest all would go on to cash in the minute they retire. One of the most important points is that you don’t require 100% of your funds on the initial month of retirement. This is a long time period, 25-30 years and hence you won’t be cash-stressed immediately due to the plummeting stock markets.
In an ideal situation, if you’re already retired or you’re all set to retire within the coming few years, you should be having a proper plan in place for such unpredictable fluctuations in the stock market conditions. However, in case you don’t have a plan in place, this is not the right time to move things in between a volatile market state. ‘Plan’ is the key word for anyone who is nearing retirement.
The last thing that you need to keep in mind before making big financial decisions is not to invest based on your emotions. Since your emotions go back to prehistoric ages, you should never let your emotions come in between your investment decisions. Ensure having enough money that you can access in the short term even when the market is volatile as that is the best way to stay protected.