Navigating the stock market’s ups and downs can feel like a wild ride, especially as you get closer to retirement. When the market takes a dive, it’s those nearing or in retirement who feel the pinch the most. They’re counting on their savings to cover day-to-day expenses, and a drop in the market could mean dipping into investments at a loss. On the flip side, staying out of the market to avoid its swings could mean missing out, especially when inflation starts biting into your savings. The key? Finding a balance between risk and reward, focusing on what you can control.

First, let’s talk about why the stock market can feel like a rollercoaster. As an example, let’s look back at 2020. The market took some of its biggest plunges in history, only to climb back up to record highs later in the year. This volatility is normal, but it can be worrying, especially if your retirement savings are on the line.

You’ve probably heard the usual advice – diversify your investments, buy in low, and keep your eye on the long-term goal. This advice is solid if you’ve got years until retirement. But what if you’re about to retire or already there? Relying on a volatile investment to pay for your monthly bills can force you to sell at the worst possible time just to maintain your lifestyle.

So, before you make any investment decisions, ask yourself these 3 critical questions:

  1. Are there lower risk options? The financial world is always changing. With interest rates going up, you might find lower risk places to put your money that still offer decent returns without the rollercoaster ride of the stock market.
  2. How much can I afford to lose? Picture what a significant loss would feel like. If you had a million dollars and lost a chunk of it overnight, how would that impact your retirement plans? Is the potential gain worth the risk?
  3. Will I still be able to cover my living expenses? It’s all fun and games until a market downturn means you can’t afford the basics. Make sure your investment strategy won’t put you in a tight spot years down the line.

It’s not just about hoping the market goes up. It’s about planning for both the good times and the bad. You can’t control the market, but you can control how much risk you take on, how much you pay in fees, and how you manage taxes.

The bottom line? Yes, investing in the stock market can be part of a smart retirement strategy. But it’s not just about where you put your money. It’s about how you manage it. If you’re feeling unsure, consider sitting down with a financial advisor to talk through your options. It’s better to make these decisions with a clear plan than to be caught off guard down the road.