Safeguard Your Retirement Savings Expert Strategies to Navigate Market Downturns

Safeguard Your Retirement Savings:

Looking for expert strategies to navigate market downturns and protect your retirement savings? Look no further. Our blog post uncovers five effective approaches to ensure a financially secure future amidst the market volatility caused by the global trade impact of the coronavirus. Don’t miss out on these essential tips to safeguard your retirement savings. Read now!

Discover essential strategies to safeguard your retirement savings amidst market volatility caused by the global trade impact of the coronavirus. In this blog post, we will explore five effective approaches that will help you ensure a financially secure future.

Fear is infecting the stock market on concerns that the spread of the coronavirus will interfere with global trade: Trading was halted for 15 minutes today after the stock market plunged at the open.

Its safe to say that only day traders like thinking about stock market crashes. But for the rest of us, trying to ignore market free falls is not a bad strategy, especially when it comes to a long-term goal like retirement.

Thats because one of the best ways to make sure your retirement accounts survive economic turbulence is to fortify those accounts as well as you can and then go do something else, come what may.

“Dont get caught up in the motion of the market when investing for a long-term goal,” says Chris Remedios, a certified financial planner with Remedios Financial Planning in San Francisco. “If it makes you uncomfortable when things go down, dont look.”

Taking the steps below will help protect your IRA, 401(k) and other retirement accounts from events beyond your control.

1. Stay invested

During big market swings, your investment portfolio could well lose money. This is where ignoring the market becomes important if youre investing for retirement.

“You have a long-term goal — try to focus on that long-term goal and not the short-term volatility of the markets,” says Rob Williams, vice president of financial planning at the Schwab Center for Financial Research.

If the turbulence has you worried, dont forget that though the market is falling, its falling from record highs. Investing in the stock market remains the best way to achieve long-term growth.

2. Check on your diversification

Even a diversified portfolio can lose money, but diversification helps stem your losses by reducing investment risk. You want to be sure youve spread your money around so if any stock market sector crashes particularly hard, youve got investments in other sectors providing stability.

“Dont be too exposed to one or two stocks. We see a lot of individuals who are invested all in one company,” Williams says.

While investing in single stocks can be risky, a single mutual fund can be completely diversified. Target-date mutual funds offer one-stop-shopping convenience, because they invest in a broad swath of stocks and bonds. Alternatively, you can build your own simple retirement portfolio to get you to your goals. Heres more on how to invest your IRA.

3. Balance stocks, bonds and your time frame

Asset allocation means figuring out what percentage of your money goes to which investment. At the highest level, that means how much money you have in stocks versus bonds.

Your time frame is important here. If youre decades away from retirement, a hefty allocation to stocks makes sense, even when the stock market is tanking because you have time to let your money ride that out. Just how hefty your allocation is will depend on your risk tolerance.

But if youre closer to retirement, make sure any money youll need for living expenses in the next five years or so is in cash or a cash-like investment such as short-term bonds.

“A rule of thumb is to have about 60% in stocks and 40% in bonds or cash at the retirement date. Moving toward that is a good way to be prepared for a down market,” Williams says.

4. Consider buying at a discount

If youre in your 20s, 30s or 40s and dont have plans to retire until youre in your 60s, time is on your side. Dont sell out of the stock market when it starts dropping.

In fact, a better strategy might be to buy more shares. “A down market just means youre buying stocks on sale,” Williams says.

Even in your 50s or older, buying might be a strategy for you too, given that retirement may last as long as two or even three decades.

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5. Pay down debt, save for emergencies

While youre aligning your investment strategy with your long-term goals, assess your overall personal finances, too.

A stock market correction can be the push you need to clean up your finances. Smart steps to put on your to-do list include paying down debt and building an emergency fund. Moving forward on those goals sets you up to better weather any economic headwinds ahead.

And dont think you have to get to perfect in 60 seconds or less. Its OK to take small steps toward each goal. For example, just $500 to $1,000 in a savings account can help provide a safe harbor from rough economic waters.

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