Written by
Ruzanna Queenan, CFA
April 12, 2022
Realtor Success

How to Manage Your Retirement Account During Uncertain Times

Many people approaching retirement are worried about the current world and economic situation and the effect that this situation will have on their retirement portfolios and their ability to retire when they want to. I often get asked what should I do with my portfolio and investments? Should I move them? Should I move into cash?

What is the best thing to do? What I recommend is that you look at your overall financial situation and all aspects of your finances and not just focus on your investments. The thing about investments is that the area of finances where you have the least control. Here, if your portfolio is allocated properly for the long-term, then you are good to go.

When I, as a financial planner, make a financial plan for my clients, I assume a certain level of volatility and drop in the markets. And I plan for the long-term with the assumptions that there will be up years and down years.

So when the portfolio is down and there is volatility in the markets, I look at your investment portfolio and your financial plan and as long as your investment portfolio is properly allocated, you should be able to weather the storm and still be able to retire from an investment portfolio perspective.

But there are aspects of your finances that you have greater control over, and the better you position yourself for retirement from all aspects of finances, the better off you’ll be.

What I typically recommend is that you look at three major aspects of your finances: 1) debt, 2)mortgage, and 3) long-term care insurance

The first thing that you want to do is make sure that you have no debt. If you have any credit card debt or any lingering student loans, you should pay them off first. You should focus on paying those off as soon as possible because the fewer bills you have and the less interest you pay now and in retirement, the better off you'll be and the less you need to worry about bills.

The second thing I recommend that you do is you pay off your mortgage or pay down as much as possible as you approach retirement. I've heard many times that, well, the interest rates are low. I should take the difference and invest in the markets, but here is the thing, everything looks really good on a spreadsheet, but real life is much more complicated than a spreadsheet.

When you invest in the markets, you expose yourself to additional volatility and if you're concerned about current volatility, you don't want to take any more risk. You want to position yourself, again, to have as few bills as possible.

With the mortgage and housing cost being one of our major expenses, if you don't have a mortgage expense, you can be that much more secure and confident in your retirement.

What I recommend is that you look at one major aspect of expenses that could be looming large in your future. And that is the long-term care expenses.

We grow older later and we live longer, but there comes a time when we cannot take care of ourselves. And if we cannot be independent and help ourselves, we may need assisted care or nursing homes.

Long-term care is an enormous expense for many people. It will put a huge dent in your ability to pay your bills. Additionally, if you're part of a couple and you don't have enough for two people, if one person ends up sick for a long time, he or she could decimate the assets of the couple and leave the other person really exposed in their most vulnerable years.

I strongly recommend that you look into long-term care insurance as a way to protect your assets and also make sure that your retirement goes the way that you plan for it.

In a nutshell, I understand that there is a lot of uncertainty and a lot of fear, and there is a tendency to look at everything that is right there in front of you, which is your retirement account and see the volatility or want to do something about it. Instead, you should take a step back, accept the volatility and make sure that you're properly allocated. And then you take a look at your overall financial situation. Tighten it, make sure that you're doing everything that you can to position yourself to be really strong in retirement.

Speak to a financial professional if you haven't, have a financial plan that will ensure a comfortable retirement no matter what the economy and the markets bring next.

Ruzanna Queenan, CFA

I am Ruzanna, the President of Queenvest. Like many women, I wasn’t always good with money, but I learned through many years of work in the financial industry how to use money well. I am fortunate to have the opportunity to help strong, ambitious business owners and executives take control of their money and ultimately, their personal success.