Planning for a long retirement requires pre-retirees and retirees to thoughtfully consider many decisions that can significantly impact their financial security. One effective way to engage with these decisions is to answer thought-provoking questions, a technique shared in a recent report from the Stanford Center on Longevity that explored how pre-retirees and retirees can improve their retirement decisions.
The goal is to inspire you to investigate how you can answer these questions effectively and, along the way, identify solutions that can work for you. With this technique in mind, here are five questions to ask yourself, along with suggestions to help you start your explorations.
Question #1: What will you do when the stock market crashes?
If you’ll be retired for 20 years or more, it’s inevitable that you’ll need to survive a handful of stock market crashes. It’s a matter of when, not if, although nobody can reliably predict when the stock market will crash and when it will recover.
Suggestion: Explore strategies that will give you confidence to ride out stock market crashes without panicking and selling your investments at the bottom of the market. Develop sources of retirement income that won’t drop when the stock market drops. Examples include Social Security, pensions, annuities, bond ladders, withdrawals from reverse mortgages, and interest income from guaranteed investments. Try to cover most, if not all, of your basic living expenses with these protected sources of retirement income.