4 Things You Can Control in Retirement

It’s normal human behavior to ignore problems and hope they’ll go away. Your 401(k) balance has been mostly going up for the past 10 years. It’s been a pleasure to glance at your statement each quarter and see your investments growing.

However, these last two quarterly statements probably show losses. The stock market has dropped more than 20% from its highest point in January 2022.

A diversified target date fund typically found in many 401(k) plans has also lost about the same in value. That’s unsettling. For those who are early in their career, it’s uncomfortable, but for people on the brink of retirement, it can be terrifying.

Keep in mind, until you actually sell your investments you haven’t actually lost money because it’s only when you sell that you realize a loss. Otherwise, you still own the same number of shares in that exchange-traded fund (ETF), mutual fund, or individual stock today that you owned when the stock market was making record highs, but today the market price per share is lower.

History shows that overall stock prices return to then surpass those low prices, and it’s that long-term investing perspective that helps people stay invested through turbulent times and grow their wealth.

If you’ve built up a retirement fund designed to last for decades of retirement, you’re not going to need to withdraw all the money at once. Even if you had to sell stock to withdraw 4% of your retirement portfolio right now, you’d still have 96% left that will likely recover and grow over the years of your retirement.

The balance you have today is not the amount you will have forever, and history is on your side for those share prices to rise over time.

Gaining control: Even though it’s sometimes hard to do, review your portfolio two to four times a year. Once you assess the situation, you might find that it’s time to rebalance. When the market changes, as it has in 2022, it might be time for the composition of your retirement portfolio to be adjusted, too.

If you don’t want to rebalance on your own, find a fee-only fiduciary who specializes in retirement income strategies and cash-flow analysis. Finally, pull up a historical stock market chart and reassure yourself that market levels rise and fall over time — but ultimately rise. Call or text your investment advisor to talk about your worries. If your adviser isn’t able to reassure you, it might be time to find a new one.