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Be Wise With Money

Don't Let a Market Downturn Derail Your Retirement

Reviewing retirement strategy and investments

Looked at your retirement accounts lately? Chances are good they've been performing well. Perhaps even extremely well. Which makes sense, given how we're in the midst of an unprecedented nine-year bull market run.

While that probably makes you happy, it could also be cause for concern. And given what happened a decade ago, a little worry is normal.

Plenty of retirement accounts had enjoyed solid growth up until 2008. Then, within weeks or even days, many stock prices dropped significantly.

One result: Many people had to put off retirement to rebuild their balances.

History tells us that a market correction is inevitable. But as for when – that's difficult to predict. So what can you do to keep your retirement plans on track – and keep your concerns in check?

One smart move: Start preparing now.

The steps you take now can help you weather the market's ups and downs. And better still, they could help protect your future.

Here are four steps you can take.

Market fluctuation strategies

1. Stress-test your portfolio.

This is exactly what the name implies – you test how your portfolio might hold up under different market downturn scenarios. At its most basic level, a stress test would examine your asset allocation, calculate possible effects under different downturn scenarios and provide insight on where you might need to adjust.

Tip: Unless you're well-versed in financial matters, stress-testing isn't a DIY exercise. Contact your financial representative for help with it.

 

2. Assess your appetite for financial danger.

Another key question to ask: What's your risk tolerance? Mark Simenstad, vice president and chief investment strategist for Thrivent Asset Management, suggests looking at your portfolio allocations and asking: "What would happen if I took a 10%, 20% or even 30% reduction in my assets? How painful would that be? How could I deal with that?" 

 

3. Harvest & rebalance your retirement portfolio.

Looking to retire within the next five years? Consider taking a conservative approach. True, the returns on fixed-income investments can be relatively modest, but now might be the time to safeguard what you've earned and move some of those earnings into safer buckets.

"As markets have risen, it can be prudent to take some money off the table, so to speak," Simenstad says.

 

4. Stay focused on your true financial goals.

"This is common advice, but it's true nonetheless: Timing the markets is impossible," Simenstad notes. "We don't try to do that with the money we manage here at Thrivent."

What can you do in lieu of predictions? Stay focused and think twice before you chase the next big thing. Heard of the quick fortunes people have made with cryptocurrencies such as Bitcoin? Try to ignore them. Those windfalls could well go the way of Internet company stocks circa 2000 and 2001.

Simenstad sums up with advice that anyone, close to retirement or just starting out in life, can take to heart: "Being disciplined is important. It's equally important to not let your emotions take over."

 

Let's talk about the market & your retirement

Have questions about how to prepare for market fluctuations? Contact a Thrivent Financial representative in your area. No one can predict when a market correction will hit, but they can discuss ways to balance your portfolio to match your risk tolerance level while working toward your goals – and help you prepare for a secure retirement. 

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