5 tips for retirees on fixed incomes to ride out this period of record inflation and stock market volatility.
If you’re like many retirees, the combination of inflation and stock market volatility may set you on edge.
“Work with what is in your control rather than rejiggering an investment portfolio at this time,” says certified financial planner Judith Ward, vice president and thought leadership director at T. Rowe Price Advisory Services. Some financial experts suggest harvesting portfolio losses and gains, but Ward, who has completed research on two long-term retirement periods, says “you can harvest losses,” but you won’t benefit from a market upturn if you do.”
Yet, “don’t make rash decisions,” Ward says. “Try to stay invested.” If you feel the need to do something, think carefully before you sell equities during market volatility. “Selling when you still have a profit” can be an option. Yet, if your portfolio is 60% stocks to 40% bonds, even when the market falls, your portfolio will tend to “rebound quicker,” she says. Typically, a 60-40 portfolio tends to recover in one to two years, she says.
Reduce your expenses. “Rather than sell stocks into a decline, pull other levers,” says Vanguard’s Pilkington. “Evaluate where you’re spending your money. Make small adjustments.” If you look at your expenses in detail there are bound to be some ways you can cut them. “Look at your essential versus discretionary spending, says T. Rowe Price’s Ward. Look at all your subscriptions, your internet service, dining out multiple times per week, even those routine lattes or mochas.
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