How Can Retirees Protect Their Nest Eggs?

While stock market fluctuations are painful for all investors, they are even more so for those nearing or in retirement. Investors who won’t be retiring for many years have plenty of time for their investments to grow. Current and prospective retirees, however, may be concerned about how market fluctuations will affect their retirement plans. If you’re looking for ways to help protect your retirement nest egg, consider the following: Try to withdraw as little as possible from your investments. If your investments have declined in value, reevaluate your current withdrawal amounts. Withdrawing the same amount from a substantially smaller portfolio means that you will deplete the balance much sooner. If you must make the same withdrawals, at least calculate what impact that will have on your current portfolio. Build up a reserve of investments not tied to the stock market, totaling three years of retirement expenses. With this reserve, you won’t have to sell your stock investments during market declines. Withdraw funds in a tax-efficient manner so they last longer. In general, you should withdraw taxable investments first so that your tax-deferred investments can continue their tax-deferred growth. In most cases, however, you will need to start taking minimum required distributions from your tax-deferred investments by age 70 ½. Reassess your asset allocation. The recent stock market fluctuations may have made you realize that your portfolio contains too ...