How Retirement Rules Changed in 2016
Data sources: Treasury.gov and Bankrate.com.
It's worth noting, however, that over the same time frame, inflation has stayed very low as well. Back in 1990, it was as high as 5.4%. Since 2009, however, it has only surpassed 3% during one year (2011).
Still, the yields offered today aren't really enough to keep pace with inflation, and that means that if retirees want to be proactive, they need to keep more of their money in stocks. That's another reason that changing the equation to determine the right stocks-to-bonds ratio could be a savvy move on your part.
Selling on anticipation of turmoil
I have a family friend that decided this summer to sell his entire retirement portfolio and put it into cash. After the Brexit vote became final, he figured, there would simply be too much turmoil in the markets, and he saw them tanking in short order. He's not alone: The night after the U.S. presidential election, I had friends texting me saying that they were getting out of the market and were scared, as Dow futures were down almost 800 points.
It turned out to be a lot of worry about nothing. While the S&P 500 dipped 5.4% immediately following July's Brexit vote, the market is up over 3% since before the vote even occurred. And Trump's win? What was viewed as an overnight disaster for the markets turned into a record-breaking day for the Dow, as it hit an all-time high less than 24 hours later -- and has continued setting records.
The takeaway is clear: Don't let your emotions get the best of you. Remember that over the long run, the things that seem like life-or-death today will be funny stories to joke about in a few years. What really matters is being comfortable with how you're invested, putting in place a set-it-and-forget-it model that allows you to focus on the things that really matter in your daily life.
If 2016 taught us anything, taking such an approach is not only good for your nest egg, but for your emotional well-being as well.
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