The dramatic drop in the value of securities, exchange traded funds (ETFs) and the overall economy has tarnished retirement portfolios.
Better living conditions, superior healthcare, and advancements by the pharmaceutical and drug industry have lead to an increase in life expectancies, which, in turn, has lead to longer retirements.
In order for individuals to acclimate to and finance these longer retirement spans, many shifted away from the traditional portfolios heavily concentrated in safe investmenst such as government bonds and started to diversify into the stock market. The combination of low interest rates and remarkable performance of the stock market over the last few years made the market very appealing and enabled retirees to cash in on the gains of the stock market, states Clifford Krauss of the New York Times.
Most retirees and other investors never saw the current situation coming, that the market would have a meltdown and cause portfoilos to lose 30% to 40% of their values. The underlying impact of this is some retirees are forced to cut back on luxuries such as cruises, second homes, dining at fancy restaurants and leaving their children with hefty inheritances. Others are looking for alternatives to fund their retirement.
It’s a sad situation all around. This illustrates the importance of a need for a strategy, especially if you’re close to retirement.
Just because the markets have been slammed, it doesn’t necessarily mean that they’re going to come back, either – there could be further losses down the pike, and investors need a strategy now to stop the bleeding. We’re working with our new clients to do just that.
Most importantly, it’s good to remember that this isn’t the end of the world and eventually the markets will recover. If you follow trends, there will be opportunities to capitalize and recover some of the losses and then some. But you need to be patient and have a discipline.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.