{"id":13507,"date":"2023-05-25T05:17:33","date_gmt":"2023-05-25T09:17:33","guid":{"rendered":"https:\/\/ifintechworld.com\/markets\/retirees-shouldnt-make-drastic-moves-because-of-the-debt-ceiling-deadline\/"},"modified":"2023-05-25T05:17:34","modified_gmt":"2023-05-25T09:17:34","slug":"retirees-shouldnt-make-drastic-moves-because-of-the-debt-ceiling-deadline","status":"publish","type":"post","link":"https:\/\/ifintechworld.com\/?p=13507","title":{"rendered":"Retirees Shouldn&#8217;t Make Drastic Moves Because of the Debt-Ceiling Deadline"},"content":{"rendered":"<div id=\"js-article__body\" itemprop=\"articleBody\" data-sbid=\"WP-BAR-0000655107\">\n<div data-layout=\"wrap\n              \" data-layout-mobile=\"\" class=\"\n        media-object\n        type-InsetMediaIllustration\n          wrap\n  article__inset\n        article__inset--type-InsetMediaIllustration\n          article__inset--wrap\n    article__inset--lead\n  \"><\/p>\n<figure class=\"\n        media-object-image\n        enlarge-image\n        img-wrap\n        article__inset__image\n      \" itemscope=\"\" itemtype=\"http:\/\/schema.org\/ImageObject\"><\/p>\n<\/figure><\/div>\n<p>As the U.S. edges closer to the debt-ceiling deadline, Dave Boniface has been fielding calls and emails from older clients.<\/p>\n<p>\u201cThe anxiety is rising pretty quickly,\u201d says Boniface, a financial advisor with Legacy Capital,\u00a0an affiliate of LPL Financial, in Forest Lake, Minn.<\/p>\n<div class=\"paywall\">\n<p>Retirees are concerned about how the economy will fare if lawmakers can\u2019t reach an agreement to lift the debt ceiling, the statutory limit on what the country can borrow to fund its operations. And they\u2019re wondering if they should take any measures to protect their portfolios, Boniface says. While the uncertainty is real and the worry understandable, it\u2019s best not to make any drastic moves, he and other experts agree.\u00a0<\/p>\n<p>Most observers expect the political drama of the debt ceiling negotiations to end in a last-minute resolution. Still, the possibility of a debt-ceiling breach and subsequent U.S. debt default is an unsettling prospect for investors still scarred from last year\u2019s steep market losses. Treasury Secretary Janet Yellen has warned of the \u201ceconomic and financial catastrophe\u201d that would transpire in the worst-case scenario.\u00a0<\/p>\n<p>The government hit the current debt ceiling of $31.4 trillion on Jan. 19, and has since then taken what Yellen has called \u201cextraordinary measures\u201d to keep the government afloat. Yellen has said that these measures could be exhausted soon, and the U.S. risks defaulting on its debt as early as June 1 if lawmakers don\u2019t act within a matter of days.<\/p>\n<p>Retirees could be especially vulnerable to market losses, if they\u2019re forced to withdraw funds from a declining portfolio to make ends meet. Social Security payments could also be delayed if the U.S. defaults.\u00a0<\/p>\n<p>It might be tempting to pull your money from the stock market and sit out any volatility. But that would be ill-advised, experts say. Even in the worst-case scenario, stocks will eventually recover. The market\u2019s best days tend to be clustered near its worst days, and you\u2019re going to miss much of the rebound if you\u2019re sitting on the sidelines.\u00a0<\/p>\n<p>Over a 20-year period, missing the 10 best days results in annualized returns that are roughly half of what you would have gotten had you stayed invested and not tried to time the market, according to research from J.P. Morgan Asset Management.<\/p>\n<p>Many pros recommend that retirees maintain a healthy cash cushion at all times. Christine Benz, director of personal finance and retirement planning for<br \/>\n        Morningstar<span>,<\/span><br \/>\n       advises that retirees keep between one and two year\u2019s worth of portfolio withdrawals in cash. (Note, that\u2019s just the portion of expenses not covered by Social Security or other income sources.)\u00a0\u00a0<\/p>\n<p>A cash allocation will insulate your portfolio from market volatility. If the market declines, you can tap your cash and leave your investments alone. Withdrawing from a declining balance will accelerate your portfolio\u2019s depletion.<\/p>\n<p>If you don\u2019t have an adequate cash cushion, it isn\u2019t too late to pad it, Benz says. The Standard &amp; Poor\u2019s 500 is up nearly 8% for the year. You could sell some appreciated stock and bolster your cash reserves. <\/p>\n<p>Boniface says he makes sure his retired clients have a reasonable runway of required distributions in low-volatility liquid assets. For anxious clients, he might raise an additional $10,000 to $15,000 cash, even if it isn\u2019t financially necessary. Boosting their liquidity makes them feel like they did something proactive to protect their portfolio and will reduce the chances that they\u2019ll bail out of the market if the going gets rough.\u00a0<\/p>\n<p>\u201cIt\u2019s only for the individual that knows they have their finger on the sell button,\u201d Boniface says.\u00a0<\/p>\n<p>Write to elizabeth.obrien@barrons.com<\/p>\n<\/p><\/div>\n<\/div>\n<p>Read the full article <a href=\"https:\/\/www.marketwatch.com\/articles\/retirees-debt-ceiling-deadline-8cb9d7b1?mod=markets\" target=\"_blank\" rel=\"noopener\">here<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>As the U.S. edges closer to the debt-ceiling deadline, Dave Boniface has been fielding calls and emails from older clients. \u201cThe anxiety is rising pretty quickly,\u201d says Boniface, a financial advisor with Legacy Capital,\u00a0an affiliate of LPL Financial, in Forest Lake, Minn. Retirees are concerned about how the economy will fare if lawmakers can\u2019t reach [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":13508,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"gallery","meta":{"footnotes":""},"categories":[241],"tags":[83],"class_list":["post-13507","post","type-post","status-publish","format-gallery","has-post-thumbnail","hentry","category-markets","tag-featured","post_format-post-format-gallery"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v20.6 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Retirees Shouldn&#039;t Make Drastic Moves Because of the Debt-Ceiling Deadline | iFintechWorld<\/title>\n<meta name=\"description\" content=\"As the U.S. edges closer to the debt-ceiling deadline, Dave Boniface has been fielding calls and emails from older clients. \u201cThe anxiety is rising pretty\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, 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