Less than 10 years until retirement

You might be no stranger to market volatility, but recent events may have you concerned about whether your plans are still on track. In uncertain times it's especially important take a steady approach toward examining what you can do to minimize risk and finding new opportunities. As you approach retirement, you want to control volatility in your portfolio and, at the same time, continue to grow your savings. You also need to address other key risks, like life expectancies, taxes and health care.

Rebalance to reduce portfolio volatility

Consider rebalancing your portfolio to make sure your investment mix is consistent with your risk tolerance level. You may want to make more conservative investments to limit your exposure to volatile markets, while keeping investments with sufficient growth potential.

Maintain a healthy cash reserve

Make sure you have enough cash or short-term investments to avoid withdrawing from investments in a down market. A good rule of thumb is to have at least a three-month “emergency fund” in FDIC-insured savings accounts, CDs or money market accounts.

Be realistic about withdrawals

A key to knowing whether you have enough money to retire is projecting how much you will need to withdraw annually for income. This is the single biggest variable you can control that will affect your retirement security.

Address other key risks

While volatility may be the most pressing issue right now, it's not the only risk that can affect your investment strategy. Keep these other risks in mind when you talk with your financial advisor:

• Longevity – As life expectancies increase, so does the risk of outliving your assets. Inflation will continue to rise before and during your retirement. Consider ways to grow your assets to outpace inflation and preserve your standard of living.
• Taxes – Tax-deferred or tax-exempt investments help your assets grow in the most tax-efficient way, and a smart withdrawal strategy can keep more money in your pocket.
• Health care – Plan for medical costs to rise faster than inflation. Out-of-pocket health care expenses are currently 13% of the money you need each year in retirement, and fewer employers are offering health care for retirees. Plan for this by adjusting your savings accordingly.
• Unexpected events – Job loss, illness, changes to Social Security, or the needs of a child or parent can all have a significant impact on your finances. Explore financial options that can account for setbacks like these in order to help protect your financial security now and during retirement.

Be flexible

Events like a volatile stock market can change your current plan, so talk with your financial advisor about your “plan B.” Maybe you'll work part-time in retirement. Or work a year or two longer before retiring. This would allow you to keep earning an income and health care benefits and delay taking withdrawals from your investments.

Make sure you have a comprehensive financial plan

Financial planning can help reduce your feelings of uncertainty. According to a recent national study, 74% of people with a comprehensive financial plan feel financially prepared despite volatile market conditions.¹ Learn more about the benefits of financial planning.