A downfall in the market can be full of anxiety if you are a regular investor and someone nearing the retirement age. Losing the hard earned money can be devastating and sitting back does not seem to be a viable option at that point of time.
When the market is down, it is advisable to not draw anything or sell stocks from the investments. This rule and guidance have always been there from the beginning and for every investor but towards the age of retirement, this rule seems to become little tricky. While planning any investment or saving for long-term use post retirement, it is important that careful consideration has been done to keep cash flowing in for the essentials at all point of time.
The easiest way to ensure that there are sufficient funds is to work for longer years. This helps in increasing the annual retirement income and also enlarges the Social Security money which can be saved for post-retirement phase. A steady cash flow can be ensured using the monthly Social Security check however; a part-time job during the retirement time period tends to push the usage of this check. A part-time job usually helps in using the saved Social Security money for clearer times.
The next item to ensure steady cash inflow is the use of pension benefit. Other than that, purchasing an annuity is recommended. Annuities will send a constant check on monthly basis. This money is for absolute must things like rental, mortgage, groceries and transportation. If investing in an annuity is not an option that you might want to explore, the alternate is to keep some ready cash. The accumulation of cash for usage after retirement should begin at least three years before the retirement. This cash helps to meet the absolute important needs when the market is down so that you do not have to pull out any funds. The saved money can later be replenished again once the market goes up.
Despite the above, if there is a need to withdraw, then setting up lower limit and upper limit is recommended. This will help the retiree manage bills and other basic functions. The upper limit will help keep a tab on overspending once the market is up.