The stock market whiplash that has occurred throughout 2020 is unlike anything anyone who isn’t a centurion has ever seen before. For Boomers, who fit into the high risk category for the virus, they have also have had to deal with the stress of seeing their financial investment portfolios take a severe beating if their financial plan wasn’t built for safety. Mike Reeves, independent retirement planning advisor of Strategic Wealth Designers says retirees or those near retirement have a rare opportunity to use a ‘get out of jail free’ card right now to fix their investment portfolio.
“Markets got absolutely hammered at the end of February/beginning of March. 30 years of saving a million dollars in their investments dropped to $700,000 in just a few weeks for many retirees,” Reeves says. “That’s scary, that changes your lifestyle with a loss that big. Fortunately the market rebounded the fastest it ever has in it’s history where most of those loses have come back to even. Take advantage of that, it’s like you got a do-over or get out of jail free card to fix your financial portfolio before this happens again.”
As investors age they do not have the fortune of time to recover from big losses. 2020 has been anything but typical, but in normal bear markets, it takes on average 7 years to see the full recovery from a big correction downswing. Reeves cautions that the stock market isn’t trading on core principals right now so investors should be cautious.
“We are in unprecedented times economically and financially. The Fed continues to pour money into the market to try and maintain a level of stabilization, meanwhile we continue to see major retailer bankruptcies, tourism and the restaurant industry barely hanging on, and over 50 million unemployment claims filed since March,” Reeves says. “Not exactly the headlines that make the investor want to jump in and ‘buy’ right now.”
Like a AAA membership gives peace of mind to the road-tripping family who might blow a tire, so also does a solid retirement plan for the boomer investor. Reeves says overcome the potential election paralysis you may be feeling and get your financial house aligned correctly so that no matter what comes in November and beyond; you are well suited to handle it with your investment portfolio.
“A lot of times people say, I don’t want to make any changes before an election. Presidents change policies not retirement plans,” Reeves says. “If your financial portfolio has a problem today, it’s going to be a problem tomorrow and a problem after the election too. Take the time to get a second opinion and put in safety nets so that your decades of accumulation doesn’t lose hundreds of thousands of dollars in just a few weeks like we saw earlier this year. Avoid changing your lifestyle by making the changes to your investments so you have a clearly defined retirement plan that features safety over risk at this stage of your life.”