Politics, tariffs, and a slowing economy are creating uncertainty, and along with it, significant market fluctuations. Stock market volatility can be unnerving, especially for retirees and those nearing retirement who depend on their investments for income. Seeing account balances fluctuate wildly can trigger panic, but history has shown that reacting emotionally to market swings is one of the biggest mistakes investors can make.
Instead of letting short-term turbulence derail your long-term plans, here are the three best strategies to navigate market volatility with confidence.
1. Stick to Your Long-Term Plan
The most important thing you can do during market volatility is to stay the course. Your investment strategy was designed for the long haul, not just for the good times. If your portfolio was built correctly, it already accounts for market ups and downs.
Selling in a panic during downturns locks in losses and makes it nearly impossible to time the recovery. Historically, markets have always rebounded, and those who stayed invested have been rewarded over time. If you’re feeling anxious, revisit your financial plan rather than your investment statement. If your goals haven’t changed, your strategy likely doesn’t need to, either.
2. Keep a Cash Reserve
One of the biggest mistakes retirees make is being forced to sell assets at a loss during downturns to cover expenses. To avoid this, ensure you have an adequate cash reserve—typically 12 months of living expenses—set aside in safe, liquid accounts like high-yield savings or money market funds.
This reserve acts as a buffer, allowing you to cover short-term cash needs without tapping into your investments when markets are down. Knowing you have this safety net in place can also help reduce stress when headlines scream market doom.
3. Rebalance and Look for Opportunities
Market volatility can create opportunities. If stock prices drop significantly, it might be a good time to rebalance your portfolio by buying stocks at lower prices. Think of it as getting quality investments on sale.
If you’re still in the accumulation phase, continue dollar-cost averaging into the market—your regular contributions will buy more shares when prices are low. If you’re in retirement, work with your financial planner to ensure your portfolio’s asset allocation remains aligned with your risk tolerance and income needs.
Final Thoughts
Market volatility is inevitable, but it doesn’t have to derail your retirement plans. Staying disciplined, maintaining a cash buffer, and rebalancing strategically will help you weather the storm and emerge in a stronger financial position. If you have concerns about your portfolio, reach out—we’re here to help you stay focused on the big picture.
