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The most recent bull market has been one of the longest in history. By some standards, it is the longest. Since March 2009, the S&P 500 has increased more than 320 percent. Although there have been some pullbacks along the way, the markets are nearing their 10th consecutive year of upward movement.1 No bull market lasts forever, though. Economic cycles, investor emotion and a range of other variables can change the market’s direction at any given time.
Recent events may suggest the current bull market is nearing its end. On Oct. 10, the Dow Jones Industrial Average (DJIA) dropped more than 800 points. The decline was attributed to a range of factors, including fears about rising interest rates, tariffs and lower-than-expected earnings.2
Markets are unpredictable, especially in the short term, so it’s never wise to try to time your investments or to pick individual winners and losers. If you haven’t reviewed your strategy recently, however, now may be the time to do so. Your financial professional can help you determine whether your current strategy is still aligned with your goals and needs. Below are a few other tips to help you through a potential market correction:
Avoid rash decisions.
Many people become more risk-averse as they enter retirement. You’ve worked your entire career to accumulate assets and fund a comfortable lifestyle. The last thing you want is to lose assets because of a market downturn.
Consider, though, that your retirement could last several decades. If you retire in your 60s and live into your 90s, that’s a 30-year retirement. To make your assets last, you’ll need some level of growth. Often, growth and risk go hand in hand. It can be difficult to avoid risk completely and still achieve the level of growth you need.
Before you make an impulsive decision, talk over your strategy with your financial professional. They may be able to suggest strategies that reduce your risk exposure or protect some of the gains you’ve achieved over the years.
Also, be careful about how much you follow the news. In today’s digital world, information is everywhere. It’s on your television, in your newspaper and even on your phone. If you find yourself worrying excessively about the financial markets, you may consider taking a break from financial news. You may find that simply hearing about the markets less frequently reduces your anxiety.
Look for ways to cut spending and increase your contributions.
It’s always wise to use a budget and be disciplined about spending. However, it’s even more important as you approach or enter retirement. If you’re retired, you may be taking income distributions from your savings. However, a downturn could limit your ability to generate income. Or your withdrawals could compound your losses and make it difficult to recover. You can protect yourself by cutting your spending and reducing your withdrawals from your investments.
If you’re not retired yet, this could be a good time to increase your contributions. If you feel comfortable investing during a downturn, consider cutting back on your spending and contributing more to your 401(k) and IRA. And be sure to review your strategy to make sure it aligns with your goals and risk tolerance.
Explore tools to limit your downside risk.
Finally, you may want to explore tools that allow for growth but minimize risk. For example, various annuities offer those features. A fixed indexed annuity offers interest that’s linked to market returns but without the risk exposure of market investments. A variable annuity with an income benefit can provide a guaranteed* income stream for life, no matter how your investments perform. A financial professional can help you decide if these tools are right for you.
Ready to protect your retirement from risk? Let’s talk about it. Contact us today at Judy Financial Group. We can help you analyze your needs and implement a strategy. Let’s connect soon and start the conversation.
*Guarantees, including optional benefits, are backed by the claims-paying ability of the issuer, and may contain limitations, including surrender charges, which may affect policy values.
Licensed Insurance Professional. This information is designed to provide a general overview with regard to the subject matter covered and is not state specific. The authors, publisher and host are not providing legal, accounting or specific advice for your situation. By providing your information, you give consent to be contacted about the possible sale of an insurance or annuity product. This information has been provided by a Licensed Insurance Professional and does not necessarily represent the views of the presenting insurance professional. The statements and opinions expressed are those of the author and are subject to change at any time. All information is believed to be from reliable sources; however, presenting insurance professional makes no representation as to its completeness or accuracy. This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, accounting, legal, tax or investment advice. This information has been provided by a Licensed Insurance Professional and is not sponsored or endorsed by the Social Security Administration or any government agency.
18148 - 2018/10/17