|Britt Erica Tunick is an award winning financial journalist who has spent the past 17 years writing about virtually every aspect of finance.|
How to Approach Your Retirement Investments Amidst a Major Downturn
By Britt Erica Tunick
The arrival of the coronavirus in the U.S. brought with it the most significant drop the stock market has experienced since the Great Depression. And, as uncertainty continues to loom, many stocks remain in freefall. While that may mean attractive buying options for some, it is anything but good news for retirees. Nonetheless, holding tight is still probably your best course of action.
In just a matter of days, people saw the overall value of their retirement portfolios plummet in many cases by 50 percent or more. While the knee-jerk reaction to such a drop may be to pull out of stocks, that’s actually the worst thing you can do amidst such uncertainty. Though market turbulence is unlikely to be short-lived, and may well signal the beginning of the recession that economists have been calling for, history has shown that stock prices will eventually recover. Ultimately, prices may even move higher than they were before COVID-19 fears sent the market spiraling. So what should you be doing until then?
If you have already retired, hopefully a good portion of your retirement savings is in bonds and cash, not just in stocks. If not, now is a good time to take a hard look at where you stand financially and see if you can scale back expenses in any areas.
It may also be the time to meet with a financial advisor, if you haven’t already done so, to determine what steps you might want to take to put yourself in a better position for the future. If you have not yet retired, but are planning to in the next year or so, you may want to consider pushing it off a bit further. Remember, if you wait to collect Social Security beyond your full retirement age, the payments will be increased by a percentage until you reach age 70.
In the meantime, you probably should not stop investing in your retirement portfolio. Despite the market decline and the losses experienced by individual stocks, many say that now is actually a great time to be putting more money into your retirement portfolio. When the market eventually goes back up, you will benefit from having bought at, or near, the bottom.