Protecting retirement savings during an unstable market

Retirement can often come with uncertainty: Will my savings last? How long will I live? Will I have unexpected healthcare expenses? Add in market volatility and inflation, and it’s hard not to worry about the retirement savings you worked so hard to build over the years. The good news is when you create a balanced retirement portfolio, it’s possible to protect a portion of your assets and help keep retirement goals on track even during an unstable market.

Prepare for a volatile stock market’s impact on retirement savings

Market volatility is a normal part of the market cycle, but it remains one of the key risks in retirement that can affect long-term financial protection. A sudden drop can cause many people to feel concerned, especially if you are near or already retired. When the market experiences a 20% or more decline in stock prices over a sustained period of time, this is known as a bear market, and it can potentially reduce the size of a nest egg. However, with a strategic approach, one can help minimize the risk to retirement savings and ensure they have the income needed to retire comfortably.

Should I retire when the stock market is down?

Retiring when the stock market is down is still possible, but it requires a thoughtful strategy to help protect your savings. One of the main concerns is sequence of returns risk, or locking in losses early in retirement that can impact long-term income. Maintaining a diversified portfolio and having cash reserves in place may provide flexibility and prevent the need to sell investments at a loss during a downturn. If you can rely on alternative income sources for the first few years, you may be better positioned to give the market time to recover, making it important to review your plan with a financial professional before moving forward.

How long will my retirement savings last?

Determining how long your retirement savings will last depends on several factors, including your annual expenses, how much you plan to take out each year, and the lifestyle you want to maintain as you age. That’s why retirement planning is not just about building a balance, but also about determining how those savings will be used over time. Larger withdrawals or higher spending needs can shorten the lifespan of your savings, while a more conservative approach may help extend that income. It’s also important to factor in market volatility, as downturns early in retirement can have a greater impact on your financial portfolio, making it essential to build a strategy that covers both planned and unplanned expenses and helps support securing retirement income for the years ahead.

Preventing risks in retirement

Your comfort with risk can often change throughout your life and as you get closer to retirement. Understanding your risk tolerance can help guide how your retirement portfolio is structured, with the goal of balancing growth potential and protection for your retirement savings. Because risks in retirement can include market downturns, inflation, healthcare costs, and longer life expectancy, aligning your approach with your personal preferences and long-term goals may also help you stay on track, even during periods of market uncertainty. Some questions that can help you identify your risk tolerance include:

• What is your investment attitude? Conservative or more aggressive?
• How comfortable are you with short-term loss?
• If the stock market drops, what are your expectations for your investments?
• What do you expect from your investments during normal market conditions?
• How often do you prefer to track your investments: daily, weekly, or monthly?

Since your risk tolerance can change as you age, completing a risk tolerance questionnaire can be helpful while reevaluating your portfolio to determine if changes need to be made.

How to help protect your 401(k)

Protecting a 401(k) during market volatility starts with maintaining a diversified mix of investments, such as stocks and bonds, to help manage risk across different market conditions. Regularly rebalancing a portfolio can help keep your investments aligned with your goals, while avoiding panic selling during a downturn can help prevent locking in losses. Continuing to contribute to a 401(k), even when markets are down, can help you take advantage of lower prices over time through dollar-cost averaging. As you approach the next stage of life, gradually shifting to a more conservative investment mix may also help preserve retirement savings and support more stable income in the years ahead.

Are my retirement savings safe?

If a bear market occurs while you’re preparing for retirement, it’s natural to worry about how it could impact your plans. A proactive approach to saving for retirement, rather than reacting to market swings, can help make a meaningful difference in helping keep your savings on track. Building a diversified retirement portfolio may help smooth out market ups and downs and provide a level of protection for part of your assets. In addition, exploring flexible, short-term strategies during volatile periods can help reduce pressure on long-term investments, while a balanced retirement portfolio that includes a mix of asset types can support greater stability and adaptability for the future.

Help secure retirement plans with a balanced retirement portfolio

There are many retirement savings options to choose from when looking to balance investments and bring more security to an overall portfolio. Securing retirement plans during periods of market uncertainty often means combining growth opportunities with protection-focused solutions that can help reduce exposure to major downturns. Fixed index annuities (FIA) are a type of financial product that can hold up in a bear market while helping protect a portion of your retirement savings during a market downturn.

If you want to create a personalized financial strategy that can lessen the impact of market volatility and help you feel more confident about the future, talk to your financial professional about your retirement goals, risk tolerance, and overall concerns. Preparation is critical in helping reduce the stress that can come with market downturns and help ensure you have the retirement savings you need for a fulfilling next chapter.

How to invest during retirement

A well-structured retirement investment approach aims to balance the need for growth to help keep up with inflation while also helping protect your savings from unnecessary risk. This often means spreading money across stocks, bonds, and cash, along with planning how and when to take money out in a way that helps make it last. FIAs can be a useful option for those looking to balance growth potential with greater protection. Since interest credits are linked to market performance and not directly invested in the stock market, an FIA will not lose value during a market decline, putting them at the lower end of the risk spectrum. For those already in retirement, FIA income payments can also offer a level of predictability, while tax-deferred growth may support a more conservative, long-term accumulation strategy as part of a broader retirement plan.

Why diversification matters for your retirement savings

Diversification is important in a retirement savings plan because it spreads investments across different asset types that may perform differently under the same market conditions. By doing so, it’s possible to reduce overall portfolio risk, take advantage of a wider range of growth opportunities, and create a more balanced approach between risk and return. A well-diversified strategy can also help provide greater stability during periods of market volatility, potentially leading to more consistent long-term outcomes. In addition, diversification may reduce the time spent checking or reacting to the market, so you can focus more on your retirement goals and less on tracking your investments.

North American can help you save for retirement

North American can help you take a more confident approach to saving for retirement by offering solutions designed to support long-term financial stability and income planning. Through options such as annuities and life insurance, you can help protect your family’s future while boosting retirement readiness. These solutions are designed to complement a broader retirement strategy focused on growth potential, protection, and flexibility. To take the next step in saving for retirement, contact a North American agent today.

This information is provided for general reference purposes and should not be viewed as investment advice or as a recommendation for a specific allocation. Neither North American Company for Life and Health Insurance, nor any agents acting on its behalf should be viewed as providing legal, tax or investment advice. Always consult with and rely on a qualified advisor.

Fixed index annuities are not a direct investment in the stock market. They are long term insurance products with guarantees backed by the issuing company. They provide the potential for interest to be credited based in part on the performance of specific indices, without the risk of loss of premium due to market downturns or fluctuation. Although fixed index annuities guarantee no loss of premium due to market downturns, deductions from the accumulation value for optional benefit riders or strategy fees or charges associated with allocations to enhanced crediting methods could exceed interest credited to the accumulation value, which would result in loss of premium. They may not be appropriate for all clients. Interest credits to a fixed index annuity will not mirror the actual performance of the relevant index.

The term financial professional is not intended to imply engagement in an advisory business in which compensation is not related to sales. Financial professionals that are insurance licensed will be paid a commission on the sale of an insurance product.

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