Volatility and Retirement Planning

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Volatility and Retirement Planning

The past year has brought unprecedented challenges for retirees, with many facing the financial effects of inflation. While it’s natural to feel anxious, it’s important to take a holistic approach to retirement planning to prepare for the future.

Retirement planning can be a complex process if you’re unprepared. With the economy in a constant state of flux, it’s easy to make impulsive investment decisions based on market volatility. However, this can have long-term effects on your financial stability. In this blog, we’ll discuss how to factor in volatility when planning for retirement. Here’s what you need to know.

What is Volatility?

Volatility refers to the degree of uncertainty or risk associated with an asset or investment, reflecting how much and how often the asset’s price has varied over time. High volatility indicates significant fluctuations in price over a short period, while low volatility suggests stability. Understanding volatility is crucial for retirement planning as it can significantly impact potential returns and risks associated with investments.

Volatility affects retirement planning because retirees generally have a lower risk tolerance and cannot afford significant portfolio losses. Investments with high volatility, such as certain stocks or cryptocurrencies, may offer higher returns but also come with increased risk. Retirees must balance the desire for high returns with the need for stability and income in their portfolio.

Furthermore, market volatility can be challenging to predict, making it important for retirees to have a diversified portfolio that includes investments with varying levels of volatility. A diversified portfolio can help mitigate the impact of market volatility on a retiree’s investment portfolio, helping them maintain financial security throughout retirement.

What Does Retirement Look Like For Me?

When it comes to your retirement, the question of how much to save can feel overwhelming. However, it’s important to understand that the answer will differ for each individual as there is no one-size-fits-all plan. For example, if someone needs to financially support adult children or elderly parents, their retirement age will likely be higher than someone who does not have these responsibilities.

Factors such as family longevity and health issues will also play a pivotal role in determining how much to save for retirement. It’s important to consider personal priorities, such as leaving money for the next generation versus spending it all during retirement. Ultimately, conducting an analysis of your circumstances with your financial advisor will determine the retirement age that best suits your needs.

Does My Portfolio Reflect My Goals?

A recent survey shows that a growing number of American investors are becoming more risk-averse as they approach retirement age. However, despite this trend, many investors continue to invest in volatile assets like stocks and even cryptocurrency.

To combat the effects of market volatility, it’s crucial to evaluate your investment portfolio and identify your risk level. Seeking guidance from a financial advisor can help you select the right investment products to safeguard your portfolio at a level of risk you are comfortable with.

As you approach your golden years, your risk tolerance understandably decreases. Insurance products like annuities can help reduce risk within a retirement portfolio, providing peace of mind and eliminating worries about leaving an inheritance for one’s children. But remember, not all annuities are created equal. Depending on the annuity, you could incur various high fees, little to no interest earned, and an inability to keep up with inflation. So always speak with your financial advisor to ensure you’re investing in the right type of annuities.

How To Create A Holistic Plan

Retirement planning can be complex and overwhelming. To ensure a financially secure future amid market volatility, it’s important to take a holistic approach that considers all aspects of one’s life, including financial, social, and emotional factors.

Start by assessing your current financial situation, including income, expenses, and debt. Determine how much you’ll need to live on in retirement, including healthcare costs and unexpected expenses. Plan for how you’ll spend your time in retirement, including social activities, hobbies, and travel. Be sure to also prepare for unexpected life events, such as illness or the loss of a loved one.

Working with a financial advisor can help create a customized investment plan that aligns with your goals and risk tolerance.

How CKS Summit Group Can Help

CKS Summit Group understands that market volatility is a major concern for retirees when it comes to planning for a comfortable retirement. That’s why we offer SMART Retirement™, a comprehensive approach to retirement planning that aims to limit post-retirement taxation and increase your retirement income while limiting risk.

Using tax arbitrage strategies, our SMART Retirement™ program helps with the following:

  • How to use tax arbitrage to increase your retirement income without risk dramatically.
  • Ways to reduce the amount of money you give to the IRS during retirement.
  • Why the rate of return is Wall Street’s half-truth and how they use misleading math to sell you.

By taking a SMART approach to retirement planning, you can mitigate the impact of market volatility on your retirement income and achieve financial security for your golden years.

Final Thoughts

Understanding volatility and its impact on investments are crucial for retirees. This is why seeking professional guidance from a financial advisor and regularly assessing your plan is essential.

At CKS Summit Group, we believe professionally managed tactical stock market and non-stock market portfolios can provide healthy, long-term upside growth potential. It can also be very effective at preserving principal while allowing for a high degree of downside risk protection.

Contact us here today to learn more about how we can help you achieve your retirement goals.