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Seeing your life savings decrease by 5, 10, or even 20 percent in a short period of time is unsettling. It is no surprise that retirees get stressed out when their portfolios experience significant volatility. 2022 has shown the impact of such volatility, with traditional stock and bond investors seeing decreases of 15% to 20% or even more. Even conservative investors with “low-risk” portfolios have seen decreases as high as 10%. It is important to remember that market environments like this are normal and expected. As Ben Carlson would say, such volatility is “The Price of Admission” for investors who want to experience the benefits of investing. However, there are some things that retirees can do to manage through market volatility.  

1) Stay the course and seek advice 

One volatile year can feel like a decade for investors. At the time of writing, the S&P 500 is down 21.0% YTD. If we zoom out to a 5-year period, that number changes to a gain of 50.5%. If we zoom out further, that number becomes even larger. Having a trusted portfolio manager and advisor is important to help you remain focused on the long-term picture. 

2) Monitor your spending  

One of the biggest risks to retirees is outliving their money. When a major market correction happens, withdrawing substantial amounts from your portfolio while it is down can dramatically reduce the amount of time your money will last. It would be prudent to hold off on any large purchases or withdrawals until the market recovers. 

3) Diversify your portfolio with alternative assets  

Stocks and bonds significantly sold off this year, leaving the traditional investor with “no place to hide.” Alternative assets such as real estate, farmland, and infrastructure provide uncorrelated returns to stocks and bonds and allow investors to further diversify their portfolios. These types of investments give investors one more tool to better manage their cashflow during retirement and reduces the risk of having to sell assets at low prices. 

We understand the importance of preserving your retirement savings. Northfront specializes in retirement planning as well as alternative investments. We believe these types of assets can complement traditional stock and bond portfolios. We provide investors to with access to pension quality alternatives through our Northfront Alternative Asset Fund. If you would like to learn more about our approach and diversified investment portfolios, please connect with us. 

About Northfront Financial

Northfront Financial, based in Calgary, Alberta is a boutique full-service financial planning firm serving professionals and business owners. We pride ourselves on being a different kind of investment firm. This stems from our humble roots, entrepreneurial spirit, and a culture of integrity and professionalism. Our goal is to offer the best investment products, services, advice, and ideas the financial industry has to offer from our experienced team, which includes individuals with the Chartered Financial Analyst® (CFA®), Chartered Investment Manager (CIM®), and Certified Financial Planner™ (CFP™) designations.