The key to sleeping at night when the stock market is tossing and turning

Jun 1st, 2016 | By | Category: Commentary

By Jennifer Landon
Commentary

Jennifer Landon_Dec_2014_cropThe stock market can be a scary place, especially in recent years. Volatility reigns supreme, and 2016 does not look to be any different; U.S. stocks posted the worst January performance since 2009 and on April 28 the Dow Jones industrial average closed down more than 1 percent for the first time since February 23, and off more than 200 points for the first time since February 11.

What are you to do when you are trying to save for retirement, and the stock market makes you nervous? All you are looking for is a good night’s sleep and the ability to grow your money – Is that too much to ask?

Take solace in the fact that you are not the only one feeling this pain. It is tough out there and trying to save enough for a comfortable retirement seems to get harder and harder with each passing day.

The National Institute on Retirement Security’s Financial Security for Future Retirees Survey is telling. Idaho’s unemployment rate for older workers was somewhat high at 5.5 percent, so working “forever” may not be an option. The survey also found that only 45 percent of private sector employees participated in an employer-sponsored retirement plan in 2012; that is less than half. We rank 30th in retirement plan coverage in the nation, so many of you are on your own when it comes to saving for retirement.

Interest rates showed their first increase at the end of last year for the first time in nearly a decade; however, it is still near zero which means low yields for savers and retirees in search of fixed income. Any further increases in the near future from the Federal Reserve are likely to be slow and gradual, if economic growth continues to disappoint.

In addition to these saving and investing challenges the costs of retirement are continuing to climb, particularly for projected future costs of health care and taxes. According to the Genworth Cost of Care Survey, the average annual cost for a private nursing home in Idaho in 2015 was $91,250 and will probably increase in the future. Additionally, according to a recent ranking of the worst states for retirees by Bankrate.com, Idaho ranked 22nd when it comes to taxes, which may amount a sizeable chunk out of your pre-tax retirement savings when withdrawn in retirement

So really, what can you do? Here are some tips that may help you prepare for the financial ups and downs of the market while staying on track with your retirement goals:

Don’t panic!

You must realize that market volatility will happen. It is expected for markets to move up and down over the short-term. Making investment decisions in a state of panic often leads to selling at market lows and buying at market highs, so don’t let your emotions drive your investment decisions.

Have a financial plan

Staying calm in the midst of uncertainty starts with having a financial plan that makes you comfortable, regardless of volatility. This plan should address both short-term and long-term needs for your savings to help you focus on the big picture rather the day-to-day market movements.

How much risk can you take?

Knowing the amount of risk you are willing to take is important to determine the investments you should own. Undergo a risk assessment for a better understanding of your needs and expectations that will help decide the contents of your current portfolio. Spouses should both be involved in this process together to be sure all are comfortable with these decisions.

Turn off the TV

Watching the financial news stations all day, every day can make anyone have doubts. These shows tend to report on the extremes; otherwise, it would not be news. They do not usually discuss what is going right in the world, so you are likely getting a skewed analysis of the current state of the market.

Get some personalized, professional advice

While your golf buddy may be an investing enthusiast, he may not have the training or understanding of your personal financial needs to provide the best advice for you. Find a trusted, licensed professional who will take the time to understand your risk tolerance and match that to your long-term goals. Investing can be complex, and having professional guidance can make all the difference.

While market volatility can be a bit daunting, it is quite normal. Just remember to keep calm and establish a financial plan that can account for short-term volatility on the way to your long-term goals.

About Jennifer Landon, Southeast Idaho’s Financial Educator:

Jennifer Landon, founder and president of Journey Financial Services, is an accomplished advisor, educator and presenter on financial topics. Landon has spent the last decade advising Idaho Falls residents on the wealth and retirement planning strategies needed to help them achieve peace of mind on their retirement journey. She is an Investment Advisor Representative and a licensed life and health insurance professional in the state of Idaho. Landon is a member of Ed Slott’s Master Elite IRA Advisor Group, the National Ethics Association (NEA) and the Better Business Bureau. For more information about Jennifer Landon and Journey Financial Services, please call (208) 552-9169 or visit www.JourneyRetirement.com.

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