What If Your Retirement Money Hits Bottom?

Wall Street hasn’t been for the faint of heart lately.

Jittery investors saw the volatile market play havoc with investment portfolios. But while the ups and downs may have created anguish for some, financial planner Bryan S. Slovon says he fielded few if any calls from nervous clients.

And that’s the way it should be when your clients are retirees or people nearing retirement, he says.

“Retirees really shouldn’t be seeing major changes in the values of their portfolios every time the market takes a huge dip,” says Slovon, founder and CEO of Stuart Financial Group ( “A well-constructed portfolio for a retiree should shield them from much of the volatility that happens with the stock market.”

If their portfolio changed as much as the market did, he says, they need to revisit their allocation plan before something really significant happens.

He says portfolios that have an appropriate level of risk – with a percentage of the money in such areas as real estate or fixed annuities – allow retirees to avoid significant losses when the stock market takes a drastic turn for the worse.

“It definitely relieves stress for people when they know they have an investment strategy that matches their stage of life,” he says.

Any retirees who felt queasy over the recent swings in the market probably have their money invested in the wrong areas, Slovon says. He suggests options that retirees, or those nearing retirement, should look for as they try to figure out how much investment risk is right for them:

  • Rule of 100. In trying to ascertain an acceptable level of risk, people should look at the rule of 100, Slovon says. For those unfamiliar with this rule, here is how it works: Start with 100 and subtract your age (or, in the case of married couples, the average of both your ages). The result is the approximate percentage of your investments that you should have in riskier investments, such as stocks.

“The rule of 100 is not the end all, but it’s a good long-term financial planning tool that’s stood the test of time,” Slovon says. For example, if you are 60, 100 minus 60 comes to 40 percent risk. “That can vary depending on each person’s situation, but it’s a good place to start,” Slovon says. “Unfortunately, one of the things that can happen is you work with people who offer nothing but risk. They offer only risk because they are part of Wall Street.”

  • Annuities. If you want a steady stream of income during retirement, an annuity can be a good choice, Slovon says. Essentially, an annuity is an insurance product that pays income. You buy the annuity, and then it pays money to you on a regular basis for life. You can have either a fixed annuity or a variable annuity.

The fixed version pays a set amount, so market performance isn’t a factor, Slovon says. With the variable version, though, you choose from a list of investments and the payout depends on how well those investments do.