Is there a bad time to retire? Does the market effect when you should plan your retirement date? And, more specifically, does the current economy and the predicted up and coming BEAR market mean you should hold off on your retirement plans?
According to Barron’s, “It’s the worst time to retire since just before the dot-com bubble burst.”
That’s a pretty serious assumption! Since equity markets have contined to make new highs for years, doesn’t that sound like an excellent time to retire? So, what’s the deal with Barron’s statement? Well – Barron is referring to the the sequence of returns and is assuming that a BEAR market (a decline of 20% or more) is expected to start soon.
If the bear market does come as expected, how should that change my course for retirement? Should I delay? Or, should I trust that the market is going to correct itself over time?
Goodwin Investment Advisory is the eternal optimist in the midst of a world of naysayers. The market has always come back and we believe it always will! We can’t predict the future, but we can make wise decisions based on the history of the market and tracking patterns as we move toward the future. Based on macro US economic indicators our economy is healthy! If the only reason people are predicting a BEAR market is because they believe it is overdue, that is not great academic reasoning. Especially since we almost hit a bear market twice and have had 8 corrections since 2009 of 10% or more (averaging 77 days) and 13 corrections of 5% of more (averaging 61 days). Thirteen 5% or more corrections of two months each means we’ve had a declining stock market for over two years time. This has not been a straight uphill climb, not even close. The good news and the bad news is that they have been relatively short. Good news because the pain doesn’t last long, bad news because they don’t last long enough for us to remember them!
Between March 2009 and October 2019, for every 8 months up, we went 2 months down. 20% of the time since March 2009 the market hasn’t just been in decline, it’s been declining by 5% or more!!! Two of those declines were 19.4% +19.8%. We were 0.6% and 0.2% away from a technically bear market twice, twice!!!!! 252 days total we were that close to bear markets. But, the market has corrected and as you see we’ve been growing a healthy market over time! As you can see in the chart the market typically goes up, not down. To say you shouldn’t retire now because things have been so good for so long, doesn’t seem to make much sense. So, take a deep breath and don’t worry about the fear tactics others are putting out there. We urge you to be patient and find someone to help you navigate and guide you through your questions – someone that can help you create a plan that you are comfortable with. Someone who knows how to help direct you to make the right investment behaviors and invest your money correctly.