Our portfolio just fell from $3 million to $2.7 million – retirement now feels like living on a knife’s edge

A Reddit user posted recently because he was concerned when his portfolio balance fell from $3 million to $2.7 million during a market downturn. He is hoping for early retirement, and since he’s planning on making his decision about when to leave work based on when his portfolio hits his target number, he was spooked by the big drop. 

Given that his portfolio balance fell, he’s rethinking whether he is actually ready to leave the corporate job he is tired of. He thought he was when he had $3 million, since that amount would have been easily able to cover his expenses, but now he has less and isn’t so sure.

So, what should the poster do about his planned departure from work — and how can he ease his mind and ensure that his retirement will be secure even with continued market fluctuations?

Market downturns are inevitable during retirement

The poster here was hit with a harsh reality early on since the market fluctuations happened before he left work, but it is a reality every single retiree must face. You are extremely unlikely to get through your entire retirement without a market crash happening. In fact, it is almost impossible for that to happen, given that downturns are a part of life.

However, the reality is that the market is cyclical. While the market will inevitably go down, it will also inevitably recover. So, as long as you can maintain enough invested during the downturn, you should be able to make back any money you lost and, if you have sound investments, should also be able to continue earning positive returns over the long-term.

The fact that these ups and downs happen is something that retirees need to be prepared for by:

• Maintaining the appropriate asset allocation and not putting all of their money in stocks
• Maintaining a safe withdrawal rate so they don’t take too much money out too quickly and risk losing everything
• Ensuring they have a built-in buffer so they have a little more money than they need in case their retirement timing is off or downturns are more prolonged than expected during their retirement

If the Reddit poster is not in a position where his assets are allocated appropriately and where he has enough money to live off without taking too much money out of his portfolio too soon, then he should not retire. If he is in a good position, though, then he shouldn’t let a temporary market downturn derail his plans. 

A financial advisor can help ensure you are ready for retirement

Seeing the market decline when you’re counting on your investments to provide income is scary. The best way to alleviate those fears is to get the right professional advice. 

A financial advisor can help you to ensure you have the right asset allocation and can work with you to confirm that you have enough money to retire, so you aren’t left guessing. Your advisor can help you develop a plan for tax-efficient withdrawals as well, and can help you create a budget in retirement that you are comfortable with.

With this assistance from an expert, you can ensure that your retirement will be a financially secure one, and you won’t have to spend your later years stressing about whether your money will last.