The article underscores the risks retirees face from stock market downturns, particularly in the initial years of retirement, termed the 'danger zone'. Factors like inflation and recession fears contribute to market volatility. Experts recommend diversification of assets, such as maintaining cash for immediate needs and using bonds for stability. Additionally, retirees should strategically manage withdrawals to avoid selling investments at a loss. For those with alternative income sources, the impact of these downturns may be less severe, highlighting the importance of individualized financial planning.
"Your first five years of retirement are the 'danger zone' for tapping accounts during a downturn... you’ll have less money for future growth when the market rebounds," says Amy Arnott.
"Some retirees need to keep an eye on the market because pulling money out when it's down can hurt their savings over time," explains Taylor Kovar.
"Typically, you'll keep one to two years of living expenses in cash... which would be accessible during market dips," advises Amy Arnott.
"For others, the market is not as big of a deal... if you have other income streams, like a pension, or if you don't rely solely on your investments," points out Kovar.
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