Ask Terry Questions When to get out of the stock market?

When to get out of the stock market?

By Terry Savage on October 13, 2019 |

Hello Terry
We always look forward to your appearances on WGN TV….We are long time fans!!
Our question is : My husband is 67 and I am 66 years old. We are currently both retired, we have no children, we own our home (no mortgage), no car payment, no credit card debt. We both are receiving SS. My husbands pension is $14k a year. We have $260k in the Russell 2000, with 40% in stocks. We live comfortably without having to go into our Russell 2000 accounts. At what point should we get out of the stock market completely. If so, what should we invest that money in? We thought you stated once , if you are retired, you should get out of stocks and put the money into 6 month treasuries. Does this still hold true?
Thank you for your kind consideration!

Terry Says

So far, so good! I think you have a reasonable plan.  Unless people have very little in the way of savings, I always advise having some exposure to the stock market to give growth that will offset the impact of inflation. (At only 3% inflation –the historic average rate– the spending power of your money is cut in half in less than 25 years!).

But I have recently been advising people who have made a lot of money in their retirement accounts, and are now close to retirement, to not be greedy! If your portfolio is “over-weighted” to stocks, by virtue of all your gains in recent years, then you might want to move some money to a more conservative investment stance.  After all, you won’t be contributing when you retire, so you can’t “take advantage” of lower prices in a bear market!

And you want to have some liquidity– ie money market fund inside a retirement account — for those required minimum distributions that will be coming  along in the next few years.  You don’t want  to be forced to liquidate positions in a bear market to take those required withdrawals.

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