What to do with your retirement during a bear market


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Grin and Bear It

There’s no sugarcoating what’s going on with the market. Both stocks and bonds are trading in bear market territory, which means they’ve fallen 20% from recent highs. Due to current macroeconomic conditions, that could remain the case for some time.


Markets are volatile at present and recession fears remain among many investors. Central banks across the world are hiking rates in a bid to slow inflation. All of this means plenty of uncertainty while investing for retirement through a 401K or similar account. But there are steps you can take in order to hopefully mitigate the damage over the long term.

Maintaining Perspective

It’s important to remember that retirement planning is not typically governed by rash decisions. Because your portfolio aims to gain over decades as opposed to months or even single years, it can be very difficult to outwit current market trends. In this case, things are on the downswing.


The S&P 500 is down more than 20% year to date as of last week, and the S&P US aggregate bond index is down 14% over the same period. It’s undeniable this can weigh on an investor’s psyche and make it tempting to sell off shares. Yet that ensures you lose on that trade.


Let’s use history as our guide. If someone invested $10,000 in the S&P 500 in 1981, that would have grown to $1.1 million as of March last year, per Fidelity Management & Research. Of course, that entails leaving the money alone during that time period. If that same investor had missed out on the past 40 years’ top five best trading days – their nest egg would now be worth around $676,000.

Steps To Consider

Even while keeping things in perspective and agreeing to bet on the market, there are things that can be done in a bid to minimize risk, including an analysis of your ideal retirement date. Depending on when an individual chooses to retire, their portfolio may take on greater or higher risk. This translates to how a portfolio allocates funds into different stocks and bonds.


On the flipside, many financial advisors say that, for those who are able, this may be a good time to think about increasing contributions. Because prices are down, it has been compared by some to buying assets on a discount. Boosting contributions in this way can help alleviate the anxiety associated with a market downturn.


Finally, if your level of anxiety is causing stress and constant worry, it’s ok to increase your emergency fund. This can include a savings account or “rainy day fund” of any kind. Boosting cash on hand can help calm some investor’s nerves. Big picture, the most important thing is to think about when you plan to retire as well as your appetite for risk – so as to strike the best balance.


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This article originally appeared on SoFi.com and was syndicated by MediaFeed.org.


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4 ways to protect yourself from forced retirement


While younger workers might have the luxury of finding new jobs with higher wages, the pandemic pushed many older workers to retire, according to a new study by The New School Schwartz Center for Economic Policy Analysis.

Out of 3.8 million older workers who lost their jobs in April 2020, 400,000 workers were retired involuntarily a year later, the study finds. Further, since March 2020, the size of the retired population between ages 55 and 74 has expanded beyond its normal level by 1.1 million people. The Schwartz Center used unemployment data to reach its conclusions.

“Those who retired left involuntarily,” says research associate Barbara Schuster. “People who could stay in their job made a choice to hold onto their job.”


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Older workers who were pushed out of their jobs the first month of the pandemic found it difficult to find another job.

“The combination of the shock and uncertainty brought about by the pandemic plus the accompanying recession caused many of these unemployed older workers to give up, thinking there was no way they would ever get hired again, so their unemployment turned into retirement,” says Carol Fishman Cohen, CEO and co-founder of iRelaunch, a career reentry sourcing, consulting and training company.


twinsterphoto / iStock


Although there is a low unemployment rate, older workers still find it more difficult than younger workers to find a new job, and often a new position will pay less than their previous role, says Teresa Ghilarducci, director of the Schwartz Center.

“When you’re that close to retirement and you lose a few years of earning, you also lose crucial pension and retirement contributions,” she says. Combine that with rising inflation and younger retirees may need to draw on their retirement savings to pay for food and gas, she says.

In fact, younger retirees are in danger of falling from the middle class into poverty. Early retirement, especially when it’s unplanned, can lead to economic challenges. Here’s how to protect your retirement savings.


Damir Khabirov / iStock


Only 7% of retirees wait until age 70 to claim Social Security. But those who wait until 70 will be eligible for around 32% more in monthly benefits, depending on when they were born.


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One of the easiest ways to manage an unexpected retirement is to learn to live with a little less space. The U.S. housing market is red hot right now so if you own a home, consider selling it and buying a smaller house or condo, says Nick Covyeau, certified financial planner and founder of Swell Financial Partners in California. “If you have built up equity in your house, you can sell at a profit, buy a smaller house with cash and still have money left over to extend your retirement,” he says.


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Residents in nine states — Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington and Wyoming — pay no income taxes. If you’re planning to sell your home, you might want to consider moving to one of those states to further stretch your retirement funds, Covyeau says.




It is possible for older workers to return to the workplace, Cohen says. Many of the people iRelaunch works with decided to return to work either because retirement wasn’t for them or they faced unanticipated financial pressures, she says. If you want to return to work, it’s important to show your value to any potential employer. “Part of the onus is on the older workers themselves, who need to put in the effort to become subject matter experts in their fields all over again and get very focused on where they can add the most value at an employer,” Cohen says.

If you don’t want to restart your career, you could take a part-time job that aligns with an interest or hobby, perhaps at a library, bookstore or home improvement store, Covyeau says. A 30-hour-a-week job can be particularly helpful if you’re two or three years from your planned retirement age and want to delay claiming Social Security, he says.

This article originally appeared on Policygenius.com and was syndicated by MediaFeed.org.


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