Is the Stock Market Still the Best Place for Your Retirement Savings?

The past few weeks have been a rollercoaster ride for investors. Stock values have plunged, causing many people to panic. And with a lot of economic uncertainty ahead, there's no telling how long it will take the market to recover from its recent fall.

You may be worried about the impact of recent stock market volatility on your retirement savings -- to the point where you're questioning whether your nest egg belongs in the stock market at all. It's an important question to be asking, and here's how to navigate it.

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When retirement is far away

It can be unsettling to see the value of your stock portfolio take a dive following a market downturn. But if you're many years away from retirement, there's really no reason to let the events of the past few weeks rattle you.

This recent bout of stock market volatility is not the first of its kind. But when you have time to ride out a storm, there's less to worry about.

Furthermore, if you're tempted to pull your retirement savings out of the stock market, don't. You need stocks in your portfolio to lend to steady growth through the years. And if you invest your retirement savings too conservatively because you're scared about market turbulence, you'll risk ending up with an income shortfall on your hands.

You should know, in fact, that if you're many years away from retirement, now is not only a good time to stay invested in the stock market, but to potentially buy more stocks when they're on sale. Before you add stocks to your portfolio, though, take a close look at its composition. You don't want to overload on one particular market segment, so be careful with the stocks you choose to buy.

When retirement is near

The advice to sit back, relax, and wait things out isn't necessarily applicable to you if you're a year away from retirement and your portfolio has just taken a massive hit. In that case, it's important to review your asset allocation immediately and make changes as necessary to ensure that you're not overly invested in stocks.

If you had 50% of your portfolio or less invested in the stock market before things took a negative turn, then you may not be sitting on such drastic losses now -- which means you may be just fine to move forward with your original retirement plans. If not, you may need to be willing to adjust your plans to account for recent portfolio changes.

Furthermore, if you're already pretty invested in stocks, you may not want to add new ones to your portfolio, despite the fact that stocks are on sale. A better bet may be to put new money into bonds, which are more stable and can generate income for your portfolio.

Although stock market volatility is nothing new, it can still be a daunting thing to deal with. And after the events of the past few weeks, you may be thinking of pulling out of the stock market for good. But if your investing strategy was a solid one from the start, then there's no need to abandon it just because the market is going through a rough patch.

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