Managing Market Volatility at Every Age

By Marc C. Shaffer

While financial market volatility can be stressful for people of all ages, the implications of a bear market generally mean different things for different life stages.

In Your 20s & 30s – Prioritize Saving.

You’ll probably see several periods of volatility in your lifetime.

One goal at this age is to save as much as you can and invest for your future. Build your emergency fund, meet or exceed your employer 401(k) match, and create individual accounts as needed.

Now is a good time to create a budget, develop savings goals and perhaps reevaluate upcoming major purchases. Are you saving and investing in order to benefit financially in the future, or spending on things that put you further from your goals?

In your 30s, keep saving, and get specific. If you plan on having children, consider setting up a 529 Plan to save for education.

If your risk tolerance allows, you may choose to be riskier in these decades because you have more time to weather volatility.

In Your 40s – Prioritize Cash Flow.

If your career is going well, you may experience lifestyle creep, where you make more money but spend more, never really getting ahead.

Increase your saving and investment buckets by paying yourself first, then allocating the remainder of the funds to different buckets. Keep an eye on retirement funding.

In your 50s – Prioritize Your Goals & Future.

You may want to help your children with college, a down payment on a home or a wedding, but will those expenses impact your goals negatively?

The less time you have before retirement, the more you might want to tighten the purse strings and get your affairs in line for a successful future. Over this decade, you will have less time to recover from major financial setbacks.

Don’t forget that catch up contributions start at age 50. If you want to save more for retirement, you can utilize this valuable tool.

In Your 60s and into Retirement – Prioritize Wealth Preservation.

For most, now is not the time to be risky.

Your nest egg should get you through the end of life, which could be 20 or more years. Can you delay Social Security benefits? Can you be strategic with your spending? Should you process annual Roth conversions? Every move to preserve your wealth can be meaningful. You will also want to manage your withdrawals and probably keep more cash on hand. This is a critical age for managing your finances through volatility.

Having a solid plan created with your goals and risk tolerance in mind is helpful at every age. Ups and downs are going to occur. It’s a natural and even healthy component of investing, but a plan can help guide you through the journey.

If you don’t have someone looking over your finances, or reminding you to turn off the news, now might be a beneficial time to get a team in place. The constant worry will do nothing for your sleep, your stress, or your peace of mind.

Please remember that different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product made reference to directly or indirectly in this content, will be profitable, equal any corresponding indicated historical performance level(s), or be suitable for you or your portfolio. Due to various factors, including changing market conditions, the content may no longer be reflective of current opinions or positions. Moreover, you should not assume that any discussion or information contained in this newsletter (article) serves as the receipt of, or as a substitute for, personalized investment advice from Searcy Financial Services, Inc.

The content of this letter does not constitute a tax or legal opinion. Always consult with a competent professional service provider for advice on tax or legal matters specific to your situation. To the extent that a reader has any questions regarding the applicability of any specific issue discussed in this content, he/she is encouraged to consult with the professional advisor of his/her choosing.  

Published for the blog on July 28, 2022 by Searcy Financial Services, your Overland Park, Kansas Fee-Only Financial Planner and Investment Manager.