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4 ways a retirement plan can survive a volatile market


Last updated 3/7/2019 at 10:10pm

DENHAM SPRINGS, La. – A volatile stock market is raising the anxiety level of some investors – especially those nearing retirement.

In the wake of last year’s closing tumble – the S&P 500 lost 6.2 percent in 2018, its worst showing since the 2008 financial crisis – market analysts and those with equities comprising much of their portfolio aren’t quite sure what to expect in 2019.

Such uncertainty necessitates reviewing and perhaps adjusting a retirement plan to protect against market downturns, some financial advisers said.

“When you’re getting closer to retirement and truly planning for it, you have to understand the effects of volatility,” Christy Smith, founder of Presley Wealth Management and an investment adviser representative, said. “People forget easily the pain of the recession when the markets are doing well. But the market will always go up and down, and it’s a struggle teaching people that to have a successful retirement, they need to truly diversify, and recession-proof, their retirement portfolio.

“How do you do that? You build a lower-volatility, long-term plan that puts some safety nets in place to protect us if we do see a recession,” she said.

Smith gave four tips for protecting a portfolio from a volatile stock market and a possible recession.

Know their personal risk level. 

“We tend as a society to not understand the difference between accumulation and preservation,” Smith said. “It’s extremely important to understand how much risk you can handle. If you build a plan based on that, you won’t make emotional decisions – which are often bad ones – when the markets go down.”

Consider a fixed-index annuity. With interest rates trending upward, bonds aren’t as safe an investment as they were.

“A fixed-index annuity is an alternative to bonds because it has principal protection built into it and thus provides safety,” Smith said. “The last few years people have been trained to think they need to invest in bonds to offset risk in their equities, but we’re in a time period now where we’re treading in some uncharted waters. The equity market is going down, but then we also have rising interest rates, which affects the bond market. When you’re using a fixed-index annuity, you won’t see the value of it go down as interest rates go up.”

Don’t overanalyze. 

“When market conditions are good, you’re looking at your 401(k) and not seeing a lot of losses, and you tend to step away and not check your account as often,” Smith said. “But in times like right now, when the market has been turbulent, people start to be more proactive and analyzing things more than normally would. Sometimes it’s better for people not to watch as much of the news, because it’s so negative and we can overreact. Put a good recession-proof plan in place with a fiduciary and don’t panic.”

Diversify the plan. 

“You don’t want to have, say, 80 percent of your portfolio in stocks, especially right now,” Smith said. “It’s important to diversify and also to understand how your money is truly invested. Have a written investment plan tailored to your goals.

“You have to understand the importance of having the mind shift of, the closer you get to retirement, the less you need to be aggressive like when you were young,” Smith said.

Christy Smith is the founder and principal of Presley Wealth Management, which she opened in 2006. An investment adviser Representative, she co-hosts a weekly radio show, “Your Money Matters,” and has appeared in The Wall Street Journal, U.S. News & World Report, MarketWatch and Kiplinger. Smith is the author of the book, “Plan, Protect, Preserve,” holds a life and health insurance license in Louisiana, passed the Series 65 securities exam and earned a Certified in Long-Term Care designation. Visit for more information.


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