Your Retirement Investments Plunge In Value, Now What?

Protect Your Retirement Investments From Extinction

Your retirement strategy changes when your source of money dries up.   Many retirees or about-to-be-retirees are finding themselves altering their retirement plans given the stock market crash.

You have several sources of retirement money; social security, personal investments and retirement plan investments.   If any of those investments are in the stock market, you have watched in horror as the value of those investments have plummeted.

When the market tumbles most investors feel a bit panic striken, but retirees or individuals close to retirement feel more of the impact.    You cannot sit idly back, put your head in the sand and hope it all works out.   You need to plan your next move.

Fighting Back When Investments Are Worth Less

When your retirement investments drop in value you can either continue to work full-time or part-time if you are already retired or you can try a lifestyle change.

Can You Say Life Style Change
  • Dont Panic when retirement investments drop

    Image via Wikipedia

    Downsize your home…do you really need the same size home you raised your family in.

  • Lower your retirement budget.  Live below your means.
  • If it’s not on sale, it does not go into your shopping cart.
  • Buy on needs not wants.
  • Do you need 2 cars in the household anymore?
  • Maximize car repairs vs buying a new one every several years.
  • Instead of golfing every day, cut back to 4 times a week.
  • Do lunch only 2 times a week.
  • Limit your travels to more local trips.
  • Some retirees are combining households with their children.
Find Other Sources Of Funds

When your retirement investments are worth less, you have less to live on.  It is also a poor time to sell investments when they are at their low point.  So you need to find other sources of money to tap into.

Annuities
  • Look into annuities; they offer a guaranteed stream of lifetime income.  What’s not to like about that?   With an annuity you will not outlive your retirement income.   With a fixed annuity your pay outs will remain steady and not fluctuate with market performance.
Reverse Mortgage
  • Discuss the pros and cons with your banker about a reverse mortgage.  Many investors consider this to be a good source of funds.
Life Insurance
  • If you have a cash value life insurance policy, borrow against that cash value.   Ask your insurance agent about paying back the loan.  With many life insurance policies you will not have to, your loan just reduces your death benefit.

Panic Loses|Calm Wins

To panic during an economic crisis would be the worst thing you can do, your thinking becomes cloudy when you are in a panic.

When the value of your retirement investments first drop you may be in denial followed by anger.  Avoid letting that anger control your financial moves.  Calm down, consider your alternatives and move forward.

 

Enhanced by Zemanta