Why stock market dive points to good news for retirees

Whenever the stock market nosedives, retirement portfolios seem to get all the attention.

And no doubt about it: the sharp market pullback that began two weeks ago is causing headaches for anyone on the verge of retirement. The big concern is so-called sequence of return risk – that is, the risk that a sharp downturn near the start of retirement will lead to a long-term shortfall in resources available for spending.

But put this in the category of “a good problem to have.” Just over half (52 percent) of households own retirement accounts and a similar number hold stocks directly or indirectly, according to Federal Reserve data. And if you are part of that lucky half, your portfolio still is much larger than a year ago – the S&P 500 has been trading around 34 percent higher than at the start of 2016 – an astonishing gain.

Actually, the very economic trends that seem to be worrying Wall Street actually will be good news for many older Americans. These include a tighter labor market, higher interest rates and – maybe – somewhat higher inflation.

Learn more at Reuters Money.

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