Three key steps for navigating market fluctuations

Minimize risk with the Advantages Retirement Plan™ during choppy markets.

Your plan for staying on track when your retirement savings journey gets bumpy.

It’s easy to feel good about investing when markets are going strong, but when your retirement savings journey gets bumpy, it’s normal to wonder if you should change your strategy or stop saving altogether.

Here are three key steps to help you keep your retirement savings on track with the Advantages Retirement Plan™.

1. Stay the course

When markets go down, it can be tempting to pull your money out of the stock market and plan to re-invest in it when rates of return start going up. While this approach seems intuitive, it rarely works. Even professional investors are rarely able to time the market in this way. If you pull money out, there is a good chance you will miss out on the recovery when it happens.  Recent analysis from J.P. Morgan found that if an investor had missed out on the 10 best days of market returns during the past 20 years, they would end up with less than half as much money than if they had stayed invested.  If you miss the recovery, there’s a good chance you’re going to make it harder to hit your financial goals.

Most long-term investment growth comes from your exposure to the stock market, and keeping your money invested means that when the market recovers, you benefit right away.

If you’re saving in the Advantages Retirement PlanTM and your money is invested in the LifePath target date fund that matches your expected retirement age, you are on the right track and can adjust your time horizon at any time.

2. Keep your savings automatic

One easy way of saving is to set up automatic contributions so that you’re contributing set amounts throughout the year. This approach is called dollar-cost averaging, and it helps you take advantage of buying into the market when prices are lower (as they are now), in balance with investing when markets rise.

The Advantages Retirement PlanTM helps by automating your contributions, whether that is monthly or biweekly. You can also use the auto-escalation feature to increase your contributions every year, which can help you reach your retirement savings goal faster.

3. Stay diversified

Investments don’t all go up or down at the same time, or by the same amount. Managed by BlackRock®, the world’s largest asset manager, the LifePath funds in the Advantages Retirement PlanTM are a research-proven strategy for growing retirement wealth, in part because they’re built to minimize the impact of market downturns by diversifying. In other words, target date funds include a mix across more than 10,000 investment types, including stocks, bonds, real estate and infrastructure. These funds are structured to grow more during your working years and shift towards lower-risk investments as you get closer to retirement.

Bonus step for physicians retiring soon or in retirement

If you’re approaching retirement age and the current marketplace has prompted you to think seriously about reducing risk in your portfolio, you have the option to introduce more certainty into your future retirement income with the Guaranteed Lifetime Income annuity, which is available through the Advantages Retirement Plan™.  This allows OMA members and their spouses or common-law partners who are between the ages of 50 and 71 to convert part of their retirement savings into regular, predictable retirement income, starting as early as age 60. The Guaranteed Lifetime Income Annuity may help you avoid outliving your retirement savings. Learn about how the annuity can provide guaranteed retirement income for life.

Remember: Market downturns are normal – and temporary

Warren Buffett is well-known for advising investors to buy, hold for the long term, and not watch the market too closely. Even with periods of volatility, markets eventually rise over the long term. And, for most people, investing for retirement is a long game.

One tried-and-true principle of retirement saving is to have a plan and stick to it.  Put simply, that plan means:

  • Having a retirement income goal
  • Saving regularly towards that goal
  • Increasing your savings when you can
  • Investing in a smart, low-fee portfolio, and adjusting your plan as your life changes

The Advantages Retirement PlanTM was designed to help OMA members and their spouses or partners achieve financial security in retirement. Staying the course is your best strategy for turning your retirement plan into reality.

To learn more about the Advantages Retirement Plan™ and LifePath funds, book a free consultation with the OMA Insurance team’s retirement specialists:

Guillermo Nafarrate
Ontario Central West
guillermo.nafarrate@oma.org

Yash Khubchandani
Ontario Central East
yash.khubchandani@oma.org