5 Tips for Managing Your Retirement in a Volatile Market

May 21, 2018 10:16:00 AM / by Darwin Bayston, CFA


After an unusually tranquil and steady climb higher in 2017, U.S. stock markets have reminded us this year of how volatile they can be at times. Dow Jones MarketWatch reported this month that so far in 2018, the S&P 500 stock index has gained or lost more than 1% in a single trading day on 32 days. One day that many retirees in particular can recall was February 5th, when the S&P 500 dropped more than 4% — a one-day negative swing that we had not experienced in nearly seven years.

Unfortunately, based on a detailed review of historical data, this volatility could be something that retirees need to brace for throughout the year.

“History suggests that once volatility spikes, it has a staying power,” according to MarketWatch. “In fact, it’s likely that the peak in volatility for 2018 lies ahead.”

As we’ve written about on this consumer blog before, it’s important that all consumers understand the importance of not panicking during stock market turmoil. That can lead to the sale of investments at prices that are at deep discounts to the reasonable value of their assets, essentially locking in losses with poor investment decisions.

But the truth is that it’s not necessarily so easy for seniors to just close their eyes and turn off their televisions during a time of increased market volatility, ignoring the declining balances in their retirement accounts. It’s only natural for someone to begin to worry about outliving their retirement savings when they see the ups and downs of the market gyrations.

Here are five tips for managing your retirement in a volatile market:


  1. Review all of your assets

    Rather than allowing a volatile market to cause you to make a hasty decision, use the opportunity to take a look at all of your retirement assets and inspect how they are allocated. This should include your investments, any properties and all other financial resources at your disposal. Are you getting the most out of these assets to help you achieve your retirement funding goals? Keep a clear head and try to conduct a dispassionate review.


  2. Talk to some pros

    If you work with a trusted financial advisor, schedule some time for a call or a meeting to review your retirement plan. Trained financial professionals can provide you with a measured assessment of the value of your assets and help you keep your cool amid volatile market conditions. If you don’t have a professional advisor, ask some friends or neighbors for suggestions of someone who might be willing to speak to you and take a look at your holdings.


  3. Resist 24/7 monitoring

    It’s hard to imagine what our lives were like prior to the internet, social media, mobile phones and all of the other technologies that allow us to stay in touch with the world around us every moment of the day — especially our grandchildren! Unfortunately, this constant online access to information can lead seniors to check up on their investments daily or even hourly. During a volatile market, this not only can increase the risk of a poor investment decision (e.g., a panic sale), but it can also lead to unnecessary anxiety as you see those balances swing between breakfast and lunch. Resist the temptation to monitor them 24/7 and stick to the pre-internet days of just reviewing those quarterly statements that come in the mail.


  4. Keep your family in the loop

    During times of market turmoil, it’s all the more important to make sure that your spouse and/or immediate family members are informed about where your retirement assets are held and how they are allocated. In particular, if you take the lead on the management of your retirement funds, then sharing this knowledge and any concerns you have about market volatility may help to ease any burdens you feel on your own shoulders. It’s also a good exercise for making sure that your future heirs are in the loop about your current holdings.


  5. Convert unneeded assets to cash

A great potential strategy for dialing down the pressure you may feel on your retirement funds is to generate additional cash by unlocking value from “illiquid” assets. Many seniors are familiar with how to achieve this objective with real estate, such as taking a reverse mortgage on your home to create a line of credit that can be tapped at any time. Another option growing in popularity with seniors is to convert an unneeded life insurance policy to immediate cash. If you’re over the age of 70 and have a life insurance policy you no longer want or can afford, that policy may be a safety net during volatile times. A life insurance policy is immune to market volatility, so it may be the extra resource that gives you peace of mind that can be tapped when and if it’s ever needed.


If you don’t know about life settlements, explore this website for information that might be helpful. Then, if a life settlement sounds like it might be a good option for you, check out the member information directory to find someone with whom you might work to meet your needs — or simply call the LISA office today at 407.894.3797 to get your questions answered and to get connected to a qualified life settlement professional.

Darwin Bayston, CFA

Written by Darwin Bayston, CFA

Darwin Bayston is President and CEO of the Life Insurance Settlement Association (LISA). His charge is to extend the outreach of the Association to all participants of the life settlement industry from consumers to capital providers, including producers, brokers, providers and service providers who are part of the life settlement market. He was previously Managing Director of Life Settlement Consulting & Management (LSCM), founded in 2004 and specialized in life settlement policy and portfolio valuations, and life expectancy analysis. He has published several articles and participated as speaker at a number of life settlement conferences. Previous to that he operated an investment advisory firm. From 1980 to 1993, he served in several capacities, including President and CEO the CFA Institute (and its predecessor organizations). While at CFA, he founded the continuing education program, was editor of the CFA Digest and supervised research projects funded by the Research Foundation of the ICFA. He began his career as an investment analyst with a Midwest life insurance company. Mr. Bayston has been Chairman of the Martha Jefferson Hospital Foundation ($100 million), a member of the Hospital’s Finance Committee and a past member of the Board of the Institute for Quantitative Research and Finance (Q Group).