Finance Professionals Weigh in on Planning for Market Volatility in Retirement

Pre-retirees and retirees need to consider the potential impact of market volatility on their nest eggs. A significant market fluctuation, whether in the U.S. or overseas, can represent substantial loss to investors.

PLYMOUTH, MA – 12 May, 2016 – The economic downturn of 2008 has had a number of lasting effects on investors and financial professionals. This is true for another group as well: those nearing or in retirement. A significant stock market fluctuation can represent a substantial loss or gain to investors. For those in retirement, it can represent a change in lifestyle. Imagine having a long-anticipated cross-country RV trip planned upon retirement, only for that dream to be put on hold or even cancelled because the individual has to continue working into retirement for a few years just to replace the lost funds.

Market volatility has become a fact of life. No one planned it to be this way, but American stock markets are affected by uncertainty in other parts of the world. Events like last year’s Shanghai Composite Crash issued a resounding wake-up call to investors all over the world. Enough time has passed for experts to analyze the factors that led up to the crash, and many believe it was a combination of events. For one, the state-owned media of China was encouraging investors to make risky moves a full year before the bubble burst. Many did just that, even borrowing money to invest. This led to a growth rate in the market that far exceeded that of the economy as a whole. As investors faced margin calls, thousands were forced to sell off shares, culminating in China’s Black Monday and Tuesday.

With China’s renminbi (RMB) now a leading world currency, investors are concerned that events like the Shanghai Composite crash may reoccur in the future. Most Americans realize how deeply the U.S. economy can suffer whenever there is market turmoil, proven by events such as the Shanghai Composite, the Russian Ruble and Stock Market Collapse of 1998, the Dotcom Bust of 2000-2001 and the Global Financial Crisis of 2008-2009, to name a few. Each of these historic crashes were triggered by unexpected events such as Russia’s default on domestic debt and devaluation of the ruble, the sudden collapse of an artificially thriving technology bubble, global stock market crashes following 9/11, unexpected sell-offs and other factors.

Considering the impact that global market performance can have on their investments and retirement income strategy, people nearing retirement are searching for greater assurances that adequate retirement funds will be there when they need them.

The new generation of consumers and investors understands the ups and downs of the market and they are preparing, or factoring that into the equation. Derek L. Gregoire of SHP Financial in Plymouth, Massachusetts, agrees with this strategy.

“The focus on planning for retirement should have, at its center, the client’s best interests and a solid income plan,” says Gregoire, an investment advisor and insurance professional. “By building upon that foundation, financial professionals can align common goals, to build the type of unique financial strategy that can help an individual feel confident that they’ll be able to get through retirement without financial shortfalls.”

One key to being prepared for that kind of retirement is strategy to address the cost of long-term health care. Given the cost of health care services, one severe health issue can have a significant impact on a retirement income plan.

“We believe people need to control the amount of risk in their retirement plan once they are in retirement,” says Matthew C. Peck, CFP® of SHP Financial. “Most retirees can live with lower returns, but not big losses. We try to achieve this by balancing income, investments, growth and principal protection.”

According to Keith W. Ellis, Jr. of SHP, while controlling the amount of risk incorporated into a retirement strategy is important once a person is approaching or is in retirement, a solid retirement income plan should include more than that. A solid plan should take into account future health care expenses and tax planning as well.

“For example, utilizing certain tax strategies with the help of a CPA and an attorney, individuals can create strategies that can both save on taxes and address costs associated with health care,” Ellis says. “It takes a comprehensive understanding of tax laws, some creativity and professionals who understand what’s at stake.

“There are also financial strategies that can enable parents to leave an inheritance to children without paying an estate tax on the monies. These are just a few of the ways to help optimize a retirement plan,” he says.

Gregoire, Peck, and Ellis all agree that most retirees are not taking full advantage of relevant legal strategies to increase their income potential in retirement. With so many opportunities to build a profitable portfolio, they believe that retirees can experience the comfortable, enjoyable golden years they’ve dreamed of in spite of what stock markets around the world are doing.

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Company Name: SHP Financial
Contact Person: Founding Partners Matthew C. Peck, CFP®, Derek L. Gregoire
Phone: 508-746-2400
Country: United States