Getting out of a Volatile Market.

VIX is a measure of the implied volatility in the stock market.  According to an online article in Time, the VIX shot up to its highest level since 2008-09. Up 50% on Monday, down 27% Tuesday, and back up 26% on Wednesday.  Now let’s put ourselves in the shoes of over 38,000 Americans. We have worked our whole lives and have been diligent about adding money to our IRAs in order to be able to retire comfortably. The problem is that our investments are sitting in the stock market.  The $400,000 that we thought would be there is now less than $200,000. Social Security income is dwindling at best, and our mortgage is still not paid off.  There are two issues I want to touch on with this scenario. 1) The volatility of the market is causing many retired individuals to have to re-think their retirement plans.  These people usually can’t enter the workforce again because the job market is too tight and employers are favoring the younger workforce. This is a big problem because the people who are retiring these days are part of the “Baby Boomer” generation. Aka there is a lot of them!  2) The loss in value of their investments results in a significant drop in income for these individuals.  As a result, there are many retirees looking to start ecommerce and online business or trying to remain in the workforce in order to generate enough money to get by.  What can be done to help correct this obvious imbalance, if anything? There are a couple ideas in my opinion. First, retirement age individuals need to get out of the volatility of the stock market.  According to the rule of 100, less than half of their entire portfolio should be allocated in the market anyways (in many instances, this is not the case.)  Next, they need to start allocating funds into investments that can get them consistent double digit percentage returns.  If someone can earn a consistent 10% annually then many of their financial problems can be solved including monthly income.  Do the math. A $100,000 investment getting 10% annual return breaks down to a little over $800 a month. How many retired persons could benefit from an extra $800 a month? Too many.