"We don't believe this is the beginning of a major market downturn," said David Henderson, a financial adviser with Jenkins Wealth Management in Englewood, Colorado. "With that as a backdrop, we have to figure out the best risk measure for their situation and if they can't handle the volatility they shouldn't be in equities."
2. Think in bucket terms.
If volatility continues, it becomes even more important to manage portfolio withdrawals to avoid selling stocks into a downturn. Some advisers adhere to a strict bucket strategy, which involves investing money in separate sleeves earmarked for specific phases or years in retirement. Others simply manage a portfolio focused on total return, but they segment a certain number of years' worth of living expenses – or their required minimum distributions – to hold in cash. That way, a retiree in theory is able to avoid selling when stocks are down.
3. Mind your RMDs.
Speaking of those required distributions that must come out of 401ks and IRAs beginning in the year one turns 70 1/2, remember that just because you're required to pay tax on that money now, it doesn't mean you have to spend it. It sounds obvious, but sometimes retirees get in a mindset that they can simply spend their RMDs, forgetting that if they substantially outlive their life expectancy or their account balances drop significantly, they'll need extra cash to meet expenses.
4. Life isn't always short.
While many older clients may feel overexposed in the stock market, particularly in recent days, they should keep in mind that even people in their mid-60s can live another three decades or more, said Austin Frye, a financial planner and founder of Frye Financial Center in Aventura, Florida.
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"One client called saying he's 'getting too old for this' volatility," Frye wrote in an email. He reminded the 65-year-old that there is a strong chance either he or his wife will live into their '90s.
"Point being, a 65-year-old still needs to be investing for the long term," he said.
About The Writer
Janet Kidd Stewart writes The Journey for Tribune Content Agency. Share your journey to or through retirement or pose a question at firstname.lastname@example.org.
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