DOW Down 19.02% – What Do Retired Baby Boomers Do Now?

The DOW is only 0.8% off 20% losses the technical level for declaring a Bear Market. What does a Baby Boomer do now?

In these volatile times cash is a position for Baby Boomers in retirement. But it may be too late to exit those poor performing buy and hold mutual funds.

It is time to review your retirement nest egg and consider each investment. If there are significant losses in some of the investments then it makes no sense to sell them right now. But if you have some investments down around 10% it might be worth considering putting them into cash.

This will at least provide you with some income to hopefully ride out any further market turmoil without forcing you to sell those investments with large losses against them.

It may be best to look at the Fixed Interest/Income Investments first.

I have never quite understood why I would pay fees of 2% to have someone manage my money in fixed interest or cash in retirement. Especially when the unit price of a fixed interest fund can go down and give me a loss.

To me the risk premium to do this makes no sense when in retirement. It is far better to save the 2% fee and control that money ourselves in retirement.

You could have 50% of your money invested in fixed income type mutual funds. So I say if you are not down too much on these assets get that money out so you control it.

If you can get $100K into a bank account that should provide you with cash to live on comfortably for at least 2 years and maybe more. Most Bear markets have only lasted a few months before turning around. But you would still need the stock market to recover your losses so you can take out more money as you need it.

Some people may have too much to lose by cashing out any mutual fund investment. If that is the case then maybe delaying retirement is the answer. Let’s be optimistic and say another year of work could see a totally different stock market picture.

Annuities may also be considered but perhaps time limited ones that can help you through this current bear market and still leave you with much of your money intact.

Alternatively reverse mortgages can provide income to live on while your retirement nest egg recovers. But reverse mortgages are fraught with danger. Many have high fees and commissions and are peddled by high commission salesman who have moved on from the sub prime mortgages.

Sometimes it seems there is no retribution for these people. They create a real estate bubble that turns bad and decimates house prices for Baby Boomers too and then knock on your door to sell you a reverse mortgage.

Seems the judges got it right to me – the right to bear arms seems a good thing!

You should consider all options and try to select the best one for your situation. Sitting still and just hoping it will all work out should only be an option if you can’t do any of the things mentioned.

Talk with your trusted financial planner and plan your strategy to get through this together.

2 Responses to “DOW Down 19.02% – What Do Retired Baby Boomers Do Now?”

  1. […] Retirement Blog wrote an interesting post today onHere’s a quick excerptIt is time to review your retirement nest egg and consider each investment. If there are significant losses in some of the investments then it makes no sense to sell them right now. But if you have some investments down around 10% it … […]

  2. Hi,

    I am currently doing computer work for a respected author. Her latest book, How Not To Go Broke at 102, Wiley 2008, contains relevant information about financial planning for baby boomers in retirement. For more information, and to read an excerpt from the book, go to the website at http://www.hownottogobrokeat102.com.

    Ian

Leave a Reply

CommentLuv badge