4 Strategies for Retirement Planning in a Volatile Economy

12 October 2022
 Categories: , Blog


One of the scariest aspects of retirement planning is dealing with the volatility of the larger economy. Watching your investments take a 20 percent loss in a single bad year, for example, can leave you feeling sick to the stomach. This is especially true if you're coming up on retirement.

A retirement planning advisor, however, will point you toward a handful of strategies. People who are worried about volatility should consider these four approaches.

Stay the Course

Many of the most consistent professional investors focus on staying the course through volatility. Over many years, the market tends to go up. However, there will be years when investors suffer major hits as the economy retracts or corrects.

Famed investor Charlie Munger once noted stock market declines of 50 percent happen two to three times per century. Anyone who holds financial investments long enough will live through at least one of these periods. According to Munger, the best approach is to stay focused on the long-term upside.

Buy the Dip

Especially if you have decades left for your retirement planning to pay off, volatility should be your friend. No one should want to overpay for investments like stocks, bonds, and real estate just because the market is booming. When volatility strikes, you should look around for financial investments you already liked because now they're on sale.

Buying the dip requires some attention to why things dipped, though. It is a good idea to work with a retirement planning advisor to ensure your investment ideas go through an independent sanity check.


Volatility stops being your friend as you get closer to retirement. One solution is to de-risk by exiting more volatile financial investments. At least once a decade, you should have a long conversation with your retirement planning advisor about the risk mixture in your portfolio. Someone who was heavy into the stock mark in their late 20s, for example, shouldn't be equally heavy into securities in their late 50s. As they approach retirement, they should move their financial interests into more stable assets like bonds, residential real estate, annuities, and other more dependable income streams.

All of the Above

None of the previous three strategies preclude the others. Folks who are staying the course can de-risk while also buying the dip. Similarly, no one should de-risk to the point they surrender all the potential upside of a volatile market. Even people in the 90s can benefit from buying a cheap winner that pays off. It is wise to talk with a retirement planning advisor so you can determine the right strategy for you.