One thing workers should dois keep up their contributions to retirement and health savingsaccounts. According to the report, new contributions areparticularly important during a downturn because equities tend tobe “on sale,” meaning they're less expensive than they would be ifthe market were rising.(Photo: Shutterstock)

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People close to retirement are watching the current market gyrations with anxiety, lest they end upwith insufficient funds in their retirement accounts to followthrough on a previously planned retirement schedule.

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But according to a Marketwatch report, they should be viewing the downturn asan opportunity rather than a disaster.

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Although they may be considering moving all their retirementsavings out of stocks and into cash or bonds, that's not the way togo, although they should have a sizeable amount in cash that'senough to cover expenses for an extended period of time.

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According to Steven Brett, president of Marcum FinancialServices in Melville, N.Y., cited in the report, those within fiveyears of retirement should consider having two to three years'worth of cash available as they enter retirement; that way theywon't be concerned about how they'll pay for everyday livingexpenses.

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Another proponent of cash, although not quite so much of it, isThomas Rindahl, a financial adviser at TruWest Wealth ManagementServices in Phoenix, Arizona. Rindahl recommends in the report thatwould-be retirees have one to two years' worth, or even CDs—at ahigher interest rate than either checking or savings accounts.

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Says Rindahl in the report, “Have additional funds in cash sothat the rest of the assets don't necessarily have to be liquidatedat an inopportune time.”

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Rebalancing portfolios is also a good idea, according to Brett,pointing out that during volatility they can be tilted toward moreconservative and then readjusted for more growth to see themthrough retirement once the market settles down.

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And don't think about plowing nearly everything into bonds,cautions Ed Gjertsen, vice president of Mack Investment Securitiesin Northfield, Illinois. He's quoted saying, “The adage that onceyou retire you should be 80% in bonds and 20% in stocks is allgone. The way a portfolio is allocated is more personal than it isbroad.”

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What people should do before retirement is plan for andcalculate retirement expenses, such as basic costs of living(housing and food), medical bills, lifestyle choices (includingvacation and gifts), taxes, charitable giving and the unexpected.That's according to James Schwarz, a financial advisor at CLEARRetirement Advice in San Mateo, California.

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Schwartz says in the report, “I look at the next five years andsay, what are the actual withdrawals we are planning?” Then, hesuggests, would-be retirees need to make sure they have enough cashand conservative investments to cover that.

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To his way of thinking, there should be about five years' worth,although those with higher worries about risk might feel betterwith 8–10 years' worth instead.

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One thing workers should do is keep up their contributions toretirement and health savings accounts. According to the report,new contributions are particularly important during a downturnbecause equities tend to be “on sale,” meaning they're lessexpensive than they would be if the market were rising.

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READ MORE:

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Risk exposure: Does your plan still offer companystock as an investment option? 

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3 takeaways on trends in advisorinvesting

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2019 stock market outlook: slower growth but norecession

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