With the 24/7 news cycle, it’s hard to avoid breaking news headlines and checking your account balance. The truth is, I hear versions of this all the time: “I made the mistake of checking my account after listening to the news. And now I’m worried.”
This anxiety can even occur when your finances are actually OK. You might have a healthy nest egg, Social Security, and a traditional pension. Many signs may suggest you’re “on track.”
And yet a down week in the market can change how you feel.
Many people don’t need another spreadsheet. Instead, it’s a plan that answers the following:
“What do I do when the market goes up or down?”
If you know the answer ahead of time, you can tune out the daily market noise, which should help steady your mood.
Why Your Brain Keeps Asking “What About This?”
Our brain is still playing catch-up. For much of human existence, it made sense to ask: “Will I have enough food for next season?”
Today’s retirement, however, requires our brain to consider something that sounded impossible: I have enough for the next 20 to 30 years.
But our more primitive part of the brain still sees the market dip not as a temporary fluctuation, but as uncertainty. And that uncertainty can feel like danger.
Instead, take a breath and respond with your process.
The “Sleep-at-Night” Baseline Check
Is the worry a real issue or just a loud alarm?
Ask yourself:
Are My Essentials Covered by Reliable Income?
If Social Security, a pension, and/or an annuity cover most of your essentials, then the market mostly impacts your “wants.”
Do I Have a Cash Buffer?
A cash buffer protects near-term spending from market fluctuations and allows for better sleep.
How Flexible Is My Spending, Really?
If you have the ability to delay an expense, like a big trip or home project during a market downturn, then you are probably more resilient.
Is My Plan Dated?
If you haven’t reviewed your assumptions about inflation, taxes, or healthcare costs in some time, your brain likely won’t trust the numbers.
If this exercise results in a real strain, that is valuable information that you can act on.
But for many people, it is their fear that is bigger than the actual risk. If that’s the case, it can help to say out loud: “I hear your concern, but our updated plan states we have enough to ride out the ups and downs.”
Why “Probability of Success” Often Doesn’t Feel Reassuring
Even for retirees whose plan says they are likely to be fine, it might not answer: what do I do when the market drops?
Without a plan that incorporates action, any movement in your portfolio can feel like a new decision. The market is up; can I spend more? The market is down; do we need to cut spending?
The Retirement Tune-Up: Your “If/Then” Plan
Here’s the solution: create a plan that includes if/then decisions.
Using “guardrails,” you decide these rules in advance so that you don’t overreact in either direction.
1. The “Raise” Rule (When Markets Are Strong)
For some retirees, even if they can afford to spend more, they don’t. But a “raise” rule allows you to enjoy the upside: If your portfolio increases above a predetermined line, then your spending may increase.
2. The “Yellow Line” Rule (When Markets Drop)
Before the panic starts, decide ahead of time what action you’ll take if markets drop. If the market drops you into a caution zone, you may temporarily pause some discretionary spending or cut back on some travel.
But the important part is it’s “specific” and it’s “temporary.” Instead of saying “we will never spend again,” phrase it as “we are tightening up our spending and then reassessing.”
3. The “Red Line” Rule (If Things Get Serious)
If the market drops below a critical line, you may decide larger actions are necessary, including withdrawing less, adjusting spending priorities, and ensuring your investments are not impacting your sleep.
Try a Market Noise Diet
You control when and how often you review your accounts. Instead, decide if you will check your accounts monthly, quarterly, or semi-annually.
If your anxiety increases between reviews, try reviewing your If/Then plan before you check your account balance.
A Final Thought
You can’t control the markets, but you can build confidence in how you respond.
With the 24/7 news cycle, headlines will be dramatic, and markets will move. But by checking your baseline and having an if/then plan, you can take a step back and know this usually isn’t an emergency because you have a plan.
By creating your plan in advance, you can stay in control of what really matters… actually living the life you’ve built.
A Few Questions to Think About
Are your essential expenses covered by reliable income? Is your cash buffer large enough to avoid selling stocks in a down market? If there is a significant market drop, do you have guardrails to tell you how much to trim? If markets are doing well, are you comfortable enough to enjoy it (within reason)? Do you have a plan that you will stick to rather than react to the news?
