The stock market has experienced significant ebbs and flows over the past year, with everything from tech innovations to new federal policies driving volatility, and there have been lots of wins and losses as a result. But for retirees and near-retirees watching their account balances fluctuate, that kind of turbulence represents more than just a slightly dwindling account balance or portfolio value. When you’re no longer working, serious market swings can be genuinely dangerous to your finances.
Part of the issue is that Americans are more dependent on their investment portfolios than usual. Defined benefit pensions have largely gone the way of the past, leaving most people to fund their own retirements through a mix of 401(k)s and IRAs — and these types of accounts are directly exposed to whatever the market decides to do on any given day. If the stock market is on the upswing, the wins can feel massive, but when things take a downturn, the impact can be devastating.
