5 Ways to Arm Your Retirement Against Volatility

Paul Miller |

It is not enough these days to put your money into a single retirement account and cross your fingers. Additionally, younger generations should avoid placing too much faith in Social Security. Economic markets today undergo drastic ups and downs over the course of months and years, resulting in setbacks for your retirement funds. Those relying on Social Security to provide for them in retirement might receive a rude awakening when the program runs out of funds. At this point in time, there are more people drawing from Social Security than contributing to its future.

Whether you are approaching retirement in the coming years or just starting to prepare as a young professional, you need to keep in mind these 5 ways to arm your retirement against volatility.

Allocate Diversely

Ask any financial advisor and you will quickly learn that diverse allocations are critical in funding your retirement. Establishing a cash savings account, traditional IRA, and Roth IRA, for example, spreads your retirement funds across a variety of assets. This approach provides a mix of immediately available funds, as well as those which you've paid taxes on and will pay taxes on in the future.

On top of this, you need a mix of conservative, aggressive, and balanced-growth assets. Approaching your retirement with too much conservatism can negatively affect your ability to generate enough income for your retirement. An approach that is too aggressive can leave you with little to nothing in retirement. Balance is critical.

Due Diligence

Consult with your financial advisor regarding investment options. If you don't have a financial advisor, contact us. Scottrade and other online investing platforms promise to give you control over your financial future, but they don't provide you the tools or education to properly analyze the market. Unless you are a financial advisor yourself, you should work with a professional to complete your due diligence and ensure that your money is invested wisely.

Be a Watchdog

If you can't emotionally remove yourself from the conversation and analyze your investment options logically, that is all the more reason to seek the help of a financial advisor. There is no shame in being emotionally connected. This is, after all, your money and your future on the line. However, your emotional responses might lead you to act too conservatively or too aggressively, compromising the health of your retirement fund in the long run. The guidance of an experienced financial advisor gives you a chance to let your guard down, and enjoy other aspects of your life, knowing your money is at work, even if you are on vacation.

Set Limits

When it comes to investing in stocks, mutual funds, and other aggressive-growth policies, set limits on how much of your income you are willing to put towards those portfolios. There is nothing wrong with keeping cash in reserve in a standard savings account to ensure that you have access to cash quickly and without penalties linked to withdrawals.


Take time to analyze the risks of your investment portfolio. Identify the investment options that are safe and those that pose a risk to your income. While you should try to avoid putting too much money into risky funds, especially as you get closer to retirement, there are times when it is appropriate to take a risk. As your financial advisor we can help you identify risky options that are worth your time and when to capitalize on that risk, as well as when to avoid it. Get a free portfolio risk analysis on our website today!

At the end of the day, you need to think critically and seek advice when necessary. Financial decisions you make today can have a lasting impact on your future. A financial advisor might seem like a waste of your money, but consulting with a professional can help you protect your money against volatile markets and save you from financial struggles in retirement.