It’s never too early for investors to start preparing for retirement.
With all the recent headwinds, including inflation, rising rates, and geopolitical tensions, it may seem like an inopportune time to play the markets. However, the current market environment is actually a great opportunity for investors in the accumulation stage.
Karsten Jeske, founder of Early Retirement Now, said on May 18 at the Morningstar Investment Conference investors do not just have to worry about making it beyond 30 years — they also need to consider how scary the ride might be over the first 10 years of retirement.
For investors in accumulation mode, the current environment is a great time to invest and hold onto their equities, Christine Benz, director of personal finance and retirement planning for Morningstar, said at the conference.
“We were talking to Cliff Asness yesterday and he made the very good point that for accumulators, this is kind of what you want,” Benz said. “You want to be a buyer in down markets and you want to be selling that stuff when the markets are elevated.”
Benz said while market volatility and extended downturns can make any investor nervous, it’s important to consider the time horizon.
“For people in the accumulation phase, yes, I think that perversely, it hasn’t felt good, but I think that the fact that we have seen stock valuations come down a little bit, that bond yields appear to be going to lend more of a helping hand then they have in the past — that argues that potentially, savers could take the pressure off themselves a little bit,” Benz said. “But I think inflation is still a headwind which argues for certainly maintaining ample equity exposure for people who are still in the accumulation slash saving phase.”
For more news, information, and strategy, visit the Retirement Income Channel.