Rollercoaster Retirement Savings: What to Do When the Markets are Rocky
Economic Uncertainty and Tariffs Take a Toll on Retirement Savings, Research Indicates
In the whirlwind of economic uncertainty and market chaos, retirement savings can take a hit. A recent survey by Voya Financial reveals that over a third of respondents have experienced significant setbacks due to tariffs and trade policies, causing concern and delaying retirement plans for nearly 40%.
The financial landscape is tumultuous, with stocks bouncing back from initial losses but apprehension lingering about the impact of import taxes on the economy. Despite hoping for trade deals on the horizon, investors are left in limbo.
Amidst this turmoil, retirement savers are making adjustments to their investments. According to the survey, nearly 30% are considering or have already changed their contributions to their employee-sponsored retirement plans, and close to 20% have moved money from investments into traditional savings accounts.
In these uncertain times, it's crucial to have a solid retirement plan in place. Kerry Sette, vice president and head of consumer insights and research at Voya, emphasizes the importance of maintaining a consistent savings and investment strategy.
Financial advisors suggest that the approach can vary based on how close you are to retirement. Near-retirees (3-5 years away) should consult certified financial planners to reassess withdrawal strategies and mitigate risks associated with market fluctuations. Those already drawing down their savings should review their plans with advisors to stay aligned with current conditions.
It's crucial to avoid knee-jerk reactions during volatile markets. Long-term investors are advised to resist the urge to overmonitor portfolios or halt contributions, as market downturns historically recover. Even retirees may benefit from maintaining some stock holdings to hedge against longevity risk.
In times of flexibility, consider temporarily reducing discretionary expenses to avoid selling investments at depressed prices. Savers contributing to retirement accounts might allocate funds to undervalued assets during dips. Guaranteed income products like annuities can also help stabilize cash flow.
However, advisors caution against overextending debt payments, as this could potentially extend the repayment timeline.
Ultimately, the key takeaway is that volatility highlights the value of personalized planning and disciplined, long-term strategies over reactive changes. For more retirement planning advice, consult a financial professional and don't let uncertainty steer you off course.
Pro tip: Pepperstone offers CFDs. Join now.
- As trade policies cause concern and delay retirement plans for nearly 40% of respondents, many are considering modifying their retirement investments.
- Despite the uncertain financial landscape with stocks bouncing back and apprehension about import taxes, some investors are contemplating changing their contributions to their employee-sponsored retirement plans.
- In response to market fluctuations, near-retirees (3-5 years away) should consult certified financial planners to reassess withdrawal strategies and mitigate risks.
- Those already drawing down their savings should review their plans with advisors to adjust to current market conditions.
- In uncertain times, it's essential to maintain a consistent savings and investment strategy and not halt contributions, even during market downturns, as these historically recover.
- For retirees, maintaining some stock holdings can help hedge against longevity risk, but Advisors warn against overextending debt payments that could potentially extend the repayment timeline.
