Retirement Funds

Terry Says

Well, I never said retirees should be completely out of the stock market –but I’m guessing you heard it that way because you are feeling uncomfortable with your exposure to the stock market!  In fact, what I said is “sell down to the sleeping point” — and you can read that entire commentary in this column from August 14th.

I’m glad you’re working with a financial planner.  It’s the planner’s job to help you stick to a plan.  You will need some stock market exposure over the long run –the next 25 years — because stocks tend to keep pace with inflation — IF it returns, and it likely will, at some point.

BUT — if you’re really feeling uncomfortable with your stock market exposure, please remember that this is YOUR money.  If you have done the work with your planner, made a retirement analysis of spending (including potential healthcare costs) and understand the risks that inflation presents (of diminishing your buying power in the future), then make a compromise.  Sell down to the sleeping point.

Sell perhaps one-third of your investments (both stocks and bonds) and put the money in a money market fund — and that’s assuming that you don’t have some liquidity on the side already.  That way, you won’t be completely upset and will be able to ride out a decline without panicking when everyone else does!  Of course if the market soars from here, you’ll miss some of the ride — but that’s the price for peace of mind.

Remember, absolutely no one knows for sure what the market will do next.  All you need to do is live through it!