Broker Check
Market Turmoil: A Quick Retirement Checklist

Market Turmoil: A Quick Retirement Checklist

November 09, 2015

October 5, 2015

Market Volatility has a way of striking a cord with even the most seasoned investor. Here are three quick tips on how to deal with unstable markets with regards to your retirement income planning.

Do you have enough cash? Typically we recommend a liquid savings fund that amounts to 6 months of expenses as an emergency or quick access fund. Since interest rates have become so dismally low, we have advised clients to have 4 months of expenses.   I like to recommend an additional sum of cash to allow for any larger purchases that you know will be coming up in the next year. One less thing to worry about, right?

 Is your income secure? During retirement it is a good idea to know how you are receiving your income. All too often, however, retirees I meet with have investment strategies solely based on equity returns with no meaningful cash flow. This is a recipe for disaster. If your portfolio is set up with a “set it and forget it” asset allocation in retirement, you will likely feel some level of disappointment during market corrections. We advise our clients to set up two income scenarios; a like to have and most importantly, a need to have income number.   The need to have number is the floor and is invested much more conservatively with additional risk mitigation tools. The like to have number can be invested to provide retirement lifestyle enhancement.

 How are you being taxed? One of the worst investment outcomes is losing money and still paying income tax. It can happen and I see it happen needlessly all the time. The way we try to add value here is with two very distinct investing styles portrayed into what I like to call asset location planning. First, what I like to do is set up active investment strategies that have a lot of trading in our client’s retirement accounts. That strategy defers tax and allows for active risk mitigation through hedging strategies. Second, we construct portfolios that have tax favorability and cash flows on the non-qualified, or personal accounts.   These investments typically have a strong cash flow and some tax favorable treatment. When you combine these in your portfolio construction, you will see more favorable outcomes, especially when you visit your accountant in tax season. This is one of the areas in which we add the most value.

This three point retirement checklist is not a panacea, but it is a great start to highlight the need to know factors of your retirement solvency.   The one thing that I do know is that following these steps will allow you to have the needed peace of mine in time of market turmoil.


Securities and advisory services offered through Cetera Advisors LLC, member FINRA, SIPC.

Cetera is under separate ownership from any other named entity. The information in this article is not intended as tax or legal advice. It may not be used for the purpose of avoiding any federal tax penalties. Please consult your legal or tax professional for specific information regarding your individual situation. Investments in securities do not offer a fixed rate of return. Principal, yield and/or share price will fluctuate with changes in market conditions and, when sold or redeemed, you may receive more or less than originally invested. No system or financial planning strategy can guarantee future results.