Expert Insights for Smart Financial Planning

We Just Got a Wake-Up Call from Wall St.; Are You Going to Pay Attention?

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There needs to be more to your retirement planning than just a stock portfolio. You need a plan in place to protect it.


Did you ever have a good dream suddenly take an awful turn — so awful you woke up and your heart was pounding?

SEE ALSO: The Biggest Risk Retirees Face Right Now

That’s how recent bouts of volatility must have felt for those who grew complacent during the bull market’s mostly tranquil growth. When the elevator that had been rising so steadily started to bump and rock and drop at the end of January, it was a reminder that the market is — and always has been — unpredictable. And if you haven’t assessed where your portfolio stands when it comes to risk, now is the time to wake up and take a look.

That doesn’t mean you should panic. In fact, that’s the worst thing you could do. When investors get spooked, they make mistakes. Your goal should be to have a plan in place that keeps you on course even when the market does take a turn, whether it’s a correction, a crash or a bear market. Here are some steps you should take now:

1. Be proactive.

Don’t wait for bad news and then start making moves. Look at your portfolio now to determine if it’s still a fit for where you are in your life. Sometimes investors pick a stock-bond mix and forget to adjust it as they get closer to retirement. Suddenly, the market drops and they realize — too late — that their risk isn’t as moderate or conservative as they thought. It’s important to look at your timeline, adjust your risk tolerance accordingly and rebalance regularly to maintain an appropriate asset allocation.

2. Have a safe harbor.

If you’re invested only in stocks and bonds and you’re worried about a market meltdown, consider further diversifying your portfolio. Look for something that isn’t correlated to the market (precious metals, for example), or talk to your adviser about safer investments (such as U.S. Treasuries) and put a portion of your savings there. That way, if the market is doing poorly, you’ll have other investments that are OK.

See Also: Don’t Let Volatility Rear-End Your Retirement Plans

3. Keep your retirement income top of mind.

The quality of your life when you stop working will depend largely on the quality of your cash flow. Make income your priority in the planning process, and you’ll have a better shot at your nest egg lasting the duration of your retirement (which could be 20 or 30 years … or more). If you don’t have a pension through your employer, or if you’re concerned about a shortfall in guaranteed income, talk to a retirement professional about creating your own pension with a fixed index annuity or market-linked CD.

I see a lot of portfolios when I meet with people, but what I don’t see are a lot of plans that integrate risk management, income and inflation strategies, tax efficiency and long-term care and estate planning.

As I write this, the market appears to have stabilized. That’s a good thing, of course, but it isn’t a sign that you should fall back into a smug slumber. It actually makes this a great time to talk to your adviser about what you hope to accomplish — what makes your heart beat faster in a good way — and then to choreograph a plan that will help make it happen.

See Also: Are You Investing or Speculating?

Kim Franke-Folstad contributed to this article.

Investment advisory services offered through Retirement Wealth Advisors, (RWA) a Registered Investment Adviser. Educated Wealth Center and RWA are not affiliated.

No investment strategy can guarantee a profit or protect against loss in periods of declining values. Past performance does not guarantee future results. Consult your financial professional before making any investment decision. Annuity guarantees rely on the financial strength and claims-paying ability of the issuing insurer. Any comments regarding safe and secure investments, and guaranteed income streams refer only to fixed insurance products. They do not refer, in any way, to securities or investment advisory products. Fixed insurance and annuity are not offered by Retirement Wealth Advisors.

John Convery is the president and founder of The Educated Wealth Center, LLC. He has passed the series 65 securities exam and is a licensed insurance producer.

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This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.