You may be wondering if you’re financially fit for retirement, especially given the current volatility in the markets—and the world at large. But regardless of what’s happening outside your door, you can take steps to help ensure your financial future remains safe and healthy.
First off, it’s key to remember that everything is temporary, especially when it comes to the markets. And that’s actually good news as long as you remain dispassionate—avoiding a knee-jerk reaction when things seem to be taking a turn for the worse. The reality is that most stock market declines have been intra-year. That means it’s very possible to ride out even the worst-seeming situations, particularly if you keep enough bonds and cash in your portfolio. With that in mind, you can be confident that there will be sunnier skies ahead, and that, in the meantime, if you have a diversity of assets in your portfolio, you’ll be able to weather the storm.
With that said, that diversification has to be strategic. It’s not enough to simply allocate your assets into different baskets. You also have to set things up in such a way that you can withdraw the funds you’ll need to actually enjoy your retirement without depleting the investment capital that produces future growth. That’s what’s called active management, and it’s a lot of work. But it’s the best way to have a tangible impact on your investment portfolio.
Up for the challenge? If it seems overwhelming and you’re not quite sure if you can handle it, you’re not alone. And it doesn’t mean you’re out of luck. Unlike cultivating your physical fitness—which requires you to put in work day after day (even if you have a trainer, he or she can’t do those push ups and crunches for you)—you can outsource your financial fitness, leaving it to a pro. He or she can avoid the pitfalls of passion and panic alike, and keep your funds in the best possible condition, given the circumstances.
Of course, you certainly have a role to play in determining your future, and one of the most important things you can do is consider what you want life in retirement to look like. Ask yourself about how you envision every aspect of your existence in retirement: where you want to live, the passions you want to pursue, the causes to which you want to dedicate your time, and what you want your legacy to be. If you’ve determined the answers to questions like these, set goals, and started building financial plans, you’re on the right track. And if you’ve just learned that you have some work to do, that’s okay too. Make the commitment to get started now, and just take it one day at a time. After all, this is a marathon, not a sprint.