What the Iran war market turmoil means for those nearing retirement
#Iran conflict #retirement #market turmoil #investment strategy #geopolitical risk
📌 Key Takeaways
- Market volatility from geopolitical tensions like Iran conflict can impact retirement portfolios significantly.
- Investors nearing retirement should reassess asset allocation to mitigate short-term risks.
- Diversification and safe-haven assets may help protect savings during market downturns.
- Consulting a financial advisor is recommended to adjust strategies based on individual risk tolerance.
📖 Full Retelling
Market shakiness may not concern long-term investors, but it could be a useful wake-up call for those on the precipice of retirement, experts say.
🏷️ Themes
Retirement Planning, Market Volatility
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"The conventional wisdom is, 'Everybody freeze, no one do anything,'" said Christine Benz, director of personal finance and retirement planning at Morningstar and the author of "How to Retire." "But the cohort of people who are quite close to retirement may actually need to take action," Benz said. The S&P 500 has see-sawed in recent days as the war expanded in the Middle East and investors feared a spike in oil prices and inflation. Stocks appeared to stabilize on Wednesday, before dropping again in early trading on Thursday . Volatility could continue as investors continue to digest news from the front lines. Market jumpiness can serve as a good moment for those nearing the end of their career to make sure their nest egg is prepared for a downturn, Benz said. Evaluate your risk One way to protect your retirement savings, especially if you'll need to live on that money soon, is to maintain a healthy exposure to safer assets, like cash and bonds, Benz said. But many older investors likely haven't recently evaluated their allocation to see whether they need to rebalance, she added. The S&P 500 has averaged an annual return of 11.64% since 1950, according to Morningstar Direct. If an investor allocated 50% of their portfolio into the S&P 500 and the other 50% into the Bloomberg U.S. Aggregate Bond Index in 2020, without rebalancing, that allocation would now be more than 68% in stocks and around 31% in bonds. "The easy path has been to just let stocks take up a bigger and bigger share of your portfolio," Benz said. "If you're on the precipice of retirement, it is smart to take a look at that portfolio and think about taking some risk out of it," Benz said. Many older workers have also been holding on to their company's stock for a long time, and "there may be significant concentration risks to address," said certified financial planner K.C. Smith, managing associate at Henssler Financial in Kennesaw, Georgia. The firm ranked No. 46 on CNBC's Financial Advisor 100 list...
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