A rocky stock market can make retirement seem further and further away.
With every twist and turn in the market, Americans are becoming more concerned with the health and stability of their retirement plans. The Dow Jones Industrial Average ended trading Wednesday up nearly 300 points, the sixth session in January the Dow saw a movement of at least 200 points.
According to a survey administered by the Lutherville-based Financial Consulate, most people don?t believe they?re properly prepared for retirement, and the market volatility can only heighten any anxiety about long-term financial planning.
“It?s a well-founded concern,” said Ted Provenza, a certified estate planner with the Provenza Group of Owings Mills. “People are living longer, and the more volatile the stock market becomes, the greater the likelihood of them outliving their money.”
The survey, of 226 investors from the Mid-Atlantic area, revealed 66 percent of respondents did not think they were adequately prepared for retirement. A majority of the respondents were 51 or older (78 percent).
Tim Maurer, director of financial planning for the Financial Consulate, said the survey was administered in the later part of 2007, before the market took a turn for the worst this month. If the same survey were taken today, Maurer said, it might reveal even more investor anguish.
“There?s no question that type of uncertainty builds with a down market,” Maurer said.
Provenza recommends investors attach a 10 percent trailing stop loss on investments to protect profits. The stop loss puts in place the action to automatically sell investments when they fall 10 percent from their highest price. As the stock rises, nothing happens. But when it falls, you sell, pocket the profit and avoid the big loss.
Maurer suggests people consider the benefits of other investments, such as international funds and commodities ? oil, gold and silver ? to offset long-term market slumps.
“There?s no question there?s an element of personal responsibility. We sometimes have a fear of the unknown,” Maurer said. “You need to question the belief that you just need to buy and hold, and that the market?s going to go up and go down and you just need to live with it.”
