Can You Retire in a Bear Market? Experts say you can.

You hear the term bear market and it automatically fills you with a sense of anxiety. You may ask yourself, what should I do with my investments? Should I sell? Should I wait it out? Possibly most terrifyingly for those who have plans to retire, the big question arises: Will I still be able to retire in this market downturn?

Fear not—we have 5 tips from our experienced team of advisors that can help you decide if retiring in a bear market is a sound move.

1. Change your perspective

While the average bear market lasts about 12 months and often leaves a negative short-term impact on investments, we would encourage you to look at a much longer time frame for investment growth.

• Top Tip: Consider how your investments are going to perform over the next 10, 20, or 30 years.
• How is your portfolio structured to handle market ups and downs and last 30+ years?

2. This is not the time to get conservative

What you’re probably used to seeing: the average retirement date fund is about 70% bonds and 30% stocks when it reaches your targeted date of retirement. However, this is not what we generally recommend.

• According to the Financial Planning Association, 75% stocks and 25% bonds has been the optimal asset allocation for taking retirement income since 1926.
• Top Tip: Yes, you want short-term income needs to be safe, but let the rest of your investments work hard for you!

3. Match income needs with asset allocation

We design specialized asset allocations for each of our customers according to their specific annual income needs forecasted over short, intermediate, and long-term time periods.

• We believe short-term income needs should be invested in short-term bonds and cash equivalents, which provide additional resiliency in portfolios during market downturns.
• Top Tip: You can benefit from hiring a professional to provide cash flow projections so you know the “when” you should take income and “how much” you’ll need to take from your portfolio.

4. Tax efficiency

Drawing income from the right account at the right time can make a big difference for your after-tax returns. Drawing from Non-Retirement accounts first allows your tax-deferred retirement accounts to grow longer.

• Most people’s taxable income drops in retirement which may create opportunities such as Roth Conversions.
• At age 72 the IRS requires you to take out a minimum of around 4% from your retirement accounts which is recognized as taxable income.
• Top Tip: Postpone unnecessary income taxes and take withdrawals from taxable accounts like your Trust, joint, or individual accounts.

5. Outsource your anxiety

Financial planning can help you see the big picture so you can feel confident about your retirement.

You do not have to go into retirement feeling anxious. Take back your psychological freedom and enjoy your retirement!

• Top Tip: Consider hiring help. Why not hire a professional to assist with something as important as your financial well-being?