Seeking Alpha

'Toxic' News And Your Retirement (Podcast)

by: SA For FAs
SA For FAs
Senior Editor, FA Content
Summary

The top three news stories spooking investors are ToXiC -- with the T for Trade, Brexit in the middle and OPEC at the end.

Pundits will be telling you to sell, but investors should follow their own individual plan, not the herd.

There is however one group for whom a toxic market may indeed be problematic, and that is retirees or those on the cusp of retirement.

Their need for retirement income may force them to sell shares at the worst possible time if toxic news indeed topples the market.

The top three news stories spooking investors are ToXiC -- with the T for Trade, Brexit in the middle and OPEC at the end. The stock market has been taking this news badly, and pundits will be telling you to sell. But investors should follow their own individual plan, not the herd.

There is however one group for whom a toxic market may indeed be problematic, and that is retirees or those on the cusp of retirement. The reason is sequence of returns risk whereby portfolio withdrawals that coincide with market drawdowns are mathematically very hard to recover from.

This brief podcast (2:51) warns that pre-retirees and retirees who have not prepared for this risk will have to reduce their standard of living; meanwhile, younger investors can use a market drawdown to their advantage.

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Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.