Ever since the stock market hit rock bottom about eight years ago, it's been going up. But, sooner or later the market will have some kind of correction. Here are three steps you can take to protect your retirement nest egg.
1. Make sure you are only taking the level of risk necessary to accomplish all your goals, even if you're comfortable with a higher level of risk. Why take unnecessary risk just for the sake of earning a little higher rate of return? Why would you want to risk your retirement lifestyle by taking on unnecessary risk?
2. Any money you think you might need or want during the next five years should not be invested in the market. This way if the market crashes, you'll be able to ride out the storm, instead of being forced to sell in a down market.
3. Pay off all your debts including your mortgage. Your goal should be to be totally debt free at or before retirement. If a lot of your investment withdrawals in retirement are going toward mortgage payments, credit card payments, or car payments, that means your investment savings have to work that much harder. Not having to withdraw money from investment accounts for mortgage payments, car payments or credit card payments, means the money in your investment account doesn't have to work as hard to maintain your retirement lifestyle.
No one wants to think about the stock market crashing, but remember, good times don't last forever. Making smart choices about your money will help you ride out any financial storms that may come your way.