FINANCIAL FOCUS: Protect your retirement against market volatility

Joe Faulk

Joe Faulk

Published: Monday, July 28, 2014 at 02:30 PM.

Financial markets always move up and down over the short term.

During your working years, you may feel that you have time to overcome this volatility. And you’d be basing these feelings on evidence: the longer the investment period, the greater the markets tend to “smooth out” their performance.

But what happens when you retire? Won’t you be more susceptible to market movements?

You may not be as vulnerable as you might think. Given our growing awareness of healthier lifestyles, you could easily spend two or even three decades in retirement — so your investment time frame won't necessarily be that compressed.

Nonetheless, time may well be a more important consideration during your retirement years, so you may want to be particularly vigilant about taking steps to help smooth out market volatility's effects.

Here are a few suggestions:

• Allocate your investments among a variety of asset classes. Proper asset allocation is a good investment move at any age, but when you’re retired, you want to be especially careful that you don’t “over-concentrate” your investment dollars among just a few assets. Spreading your money among a range of vehicles — stocks, bonds, certificates of deposit, government securities and so on — can help you avoid taking the full brunt of a downturn that may primarily hit just one type of investment. (Keep in mind, though, that while diversification can help reduce the effects of volatility, it can’t assure a profit or protect against loss.)

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