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June 24, 2016

Penelope Wang

Buckle up. Britain’s vote to exit the European Union stunned Wall Street and overseas exchanges, not to mention the British government. The stock market is (over)reacting accordingly, so you probably don’t want to check your 401(k) statement today. As a retirement saver, there’s no reason to panic. You have a major advantage over professional investors, after all—you’re not trying to hedge against the declining pound or unwind derivative bets. Just keep saving for the long-term in a low-cost, diversified portfolio. Easier said than done, of course, so here are three guidelines for riding out market upheaval.

1. Get some perspective. Yes, market plunges are unnerving, especially now that every tick of the Dow is transmitted by TV, smartphones, and social media. If you’re feeling anxious, click away from the news and look at financial history—back in March 2009 the Standard & Poor’s 500 was down 40%, but the market rebounded and delivered a historic bull rally. No one knows where the market will go from here, which is all the more reason to stay diversified. But stocks remain your best bet for long-term growth.

2. Review your asset allocation. This is not the time to start tweaking your portfolio. But you do want to make sure that your asset mix fits your goals and risk tolerance. If you are finding it difficult to sit through this kind of market volatility, you may want to ratchet down your stake in stocks. But don’t sell during the crisis—instead, start directing future contributions to bonds and cash. (And if you’re nearing retirement, you should already be doing this.) Better yet, talk with a financial adviser who can help you find a more suitable allocation. Meanwhile, everyone else should consider rebalancing back into stocks if the market continues to sag.

3. Control what you can control. In the end, your own actions will have a lot more impact on your retirement security than what happens in London, Brussels or Washington. So stay focused on the areas you can have the most impact, including keeping your career skills up to date and saving as much as you can. Remember, over the long run, the amount you stash away in your 401(k) has a far bigger impact than the returns you earn. So don’t rely only on stocks to build your portfolio. Those monthly contributions remain the key a comfortable retirement.

Best wishes,


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These Are the Best (and Worst) States to Retire Rich

We all wish we had more money stashed away for retirement. But if you reside in a low-cost state, your savings can go a lot farther, and you might even be able to retire rich. Or at least a bit richer. So check out this list to see which places look most affordable. Delaware, anyone? MONEY

3 Moves to Boost Your Odds of an Early Retirement

Let’s face it, achieving early retirement is a challenge, especially in an era of low returns. But as reporter Susie Poppick explains, making the right savings and investing moves can greatly improve your chances. Most of all, you need the right mindset—you have to make your early retirement goal a top priority. CNBC

2 Deadly Wealth Management Assumptions

If you’re working with a financial adviser or wealth manager, pay attention to this heads up. Financial adviser and writer Josh Brown outlines two ways that a trusted adviser may prove to be untrustworthy. Pro tip: A well-known brand name won’t protect you from getting ripped off. REFORMED BROKER

Expand Social Security? Trustees Say Solvency Remains the Issue

The latest Social Security/Medicare trustee report is out, and the news is about what you’d expect. Yes, boomers are still retiring, and yes, money to fund their benefits is still running short—especially for Medicare. There is some good news, but don’t expect much a cost-of-living adjustment next year. MONEY

Baby Boomers Reach a Milestone: Time to Take Your RMDs

The oldest boomers turn 70 ½ on July 1. That means you have to take required minimum distributions (RMDs) from your pre-tax IRA and 401(k) accounts. Typically you have until the end of the year to do so. But in the year you turn 70 1/2, you can defer until April 1 of the following year, though you will have to take a second withdrawal that same year. Get this right, since the penalties are steep. INVESTMENT NEWS

Tax-Efficient Spending Strategies for Your Retirement Portfolio

Traditional wisdom calls for letting your tax-deferred accounts to grow as long as possible, while drawing down taxable accounts first. But when you reach RMD stage (see above), withdrawals from your pre-tax accounts may push you into a higher tax bracket. A better approach may be to tap those pre-tax accounts earlier or do partial Roth IRA conversions, says financial adviser Michael Kitces. NERD’S EYE VIEW

401(k) Rollover Advice Is About to Get Better But More Complicated

Advisers used to routinely recommend rolling over your 401(k) to an IRA when you leave your job, especially if the new investment paid them a commission. The new fiduciary rule will require them to put your interests first, but that means you’ll need to think more carefully about staying or going. Here’s what to keep in mind. USA TODAY

23 Ways Getting Shape Can Boost Your Finances

You already know that health care costs are rising fast. So you need to do everything you can to minimize those bills, which will enable you to stash away more for retirement. Staying healthy can also help you remain productive at work and improve your ability to make smart financial decisions as you age. MONEY

Is Suburbia Ready for Retiring Baby Boomers?

Decades ago, when boomers began building families in the suburbs, the McMansion/minivan lifestyle was a good fit. But now that they’re growing older, boomers may find that multi-level homes and a car-centric culture won’t serve them well. This will be an increasingly urgent issue, so start thinking about your future needs now. PBS


4 Simple Steps to Designing Your Retirement Roadmap

Q: I am a newly retired 65-year-old woman who lives alone in New York City. I plan to move to Florida or overseas because the costs are so high. How should I approach the move and other basic questions about my retirement? I don’t know much and need a roadmap! –Tess, NYC

A: Funding retirement is all about trade-offs. There are many variables and they come with vastly different costs. “Explore different options and look at them side by side,” says Leigh Van Heule, national financial planning program manager for BMO Harris Financial Advisors. The idea is to get the best balance of what you want and what you can afford. READ MORE


“This is the excellent foppery of the world, that, when we are sick in fortune—often the surfeit of our own behavior—we make guilty of our disasters the sun, the moon and the stars.”

--William Shakespeare, King Lear

ABOUT PENNY: Penelope Wang is editor at large at MONEY with a focus on retirement planning. A graduate of Swarthmore College and Columbia University School of International Affairs, she was recently ranked among the "top social influencers in personal finance and wealth." You can email her at retirewithmoney@moneymail.com and follow her on Twitter @PennyWriter.

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