Enable Accessibility
Personal Online Banking
All personal banking clients, please enter your online credentials here:
e‑Treasury Business Banking
Log in
Safeguarding your online banking sessions is our top priority. For information about how you can help protect your online banking sessions, or if you need additional assistance with your e-Treasury log-in, please contact Client Support at [email protected] or 855.274.2800.

Download our e-Treasury Secure Browser

Business Online Banking
If you need assistance, please contact Client Services at [email protected] or 855.274.2800.
Log in
Safeguarding your online banking sessions is our top priority. For information about how you can help protect your online banking sessions, or if you need additional assistance with your e-Treasury log-in, please contact TM Service at [email protected] or 212.575.8020.

Download our e-Treasury Secure Browser

Download the Sterling e-Treasury Token Client

Business Online Banking
If you need assistance, please contact Client Services at [email protected] or 855.274.2800

For optimal viewing experience, please use a supported browser such as Chrome or Edge

Download Edge Download Chrome

Avoid the market timing trap in retirement

Published on October 1, 2020 | LPL Financial

After decades of adding to your retirement accounts, making the mental switch to withdrawal mode can be a challenge. It may be tempting to try to time the market to mitigate the risk of any sudden drops or ongoing turbulence. However, market timing is almost unequivocally a bad idea, especially when you no longer have the ability to financially recover from major mistakes. Learn how creating a financial plan for your retirement can help you avoid any sudden, costly moves.

Why market timing doesn’t work

It can be painful to watch your hard-earned money evaporate during a particularly rocky period in the stock market. This makes it tempting to sell when values start dropping, then buy back in once they’re on the rebound.

However, successful market timing requires investors to be right not once but twice—selling near the top and buying back in at the bottom. Predicting both the market high and low can be a challenge even for the most experienced investors, and many of the top-performing days in the stock market are interspersed among some of the most poorly-performing days.

In fact, someone who found themselves sitting on the sidelines during the best 10 market days between 1998 and 2019 had their total investment return cut in half.1 Missing less than two weeks over two decades may seem like a blip in the grand scheme of things, but this shows that even a short stint of poor market timing can have lifelong consequences. Instead, it’s important to find an asset allocation you’re comfortable with, and then stick with it through times of turbulence and prosperity.

How a financial plan can help

One way to avoid fiddling with your investments too much in retirement is to have a financial plan. By knowing in advance how much you’ll be spending each month (and, therefore, how much you’ll need to withdraw from your investments), you can reach an asset allocation that provides plenty of breathing room. For some, it may make sense to have anywhere from six months to a year or more of living expenses set aside in cash; in other situations, it makes more sense to have as much of your money as possible working for you in the market.

A financial plan is more than just a budget. It also takes into account things like federal and state income tax rates and early withdrawal penalties, ensuring that you’re drawing from taxable and tax-free accounts in a way that minimizes your overall tax liability. Someone whose retirement assets are largely held in pre-tax accounts like an IRA or 401(k) may wind up with a very different spending plan and asset allocation than someone whose assets are in a Roth or other post-tax account.

A financial plan can also provide some built-in flexibility, allowing you to revise your approach if something happens to change your income or spending projections.


Important disclosures

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investment(s) may be appropriate for you, consult your financial professional prior to investing. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and cannot be invested into directly.

The information provided is not intended to be a substitute for specific individualized tax planning or legal advice. We suggest that you consult with a qualified tax or legal advisor.

All information is believed to be from reliable sources; however, LPL Financial makes no representation as to its completeness or accuracy.

Asset allocation does not ensure a profit or protect against a loss.

The Roth IRA offers tax deferral on any earnings in the account. Withdrawals from the account may be tax free, as long as they are considered qualified. Limitations and restrictions may apply. Withdrawals prior to age 59 _ or prior to the account being opened for 5 years, whichever is later, may result in a 10% IRS penalty tax. Future tax laws can change at any time and may impact the benefits of Roth IRAs. Their tax treatment may change.





Content Provider: WriterAccess

LPL Tracking: 01-05039876

Related Resources

Webster InvestmentsArticles
An essential guide to Estate Planning preparedness
A recent survey by Caring.com found that a whopping two in three American adults do not have an estate plan1—an alarming statistic, considering that an estate plan can protect your assets and ensure that they go to the right people. If you have not begun to prepare an estate plan, or if your estate planning […]
Webster InvestmentsArticles
5 Milestones That Mean It’s Time for a Life Insurance Review
Obtaining a life insurance policy is part of being an adult. But it’s also something that you can easily neglect, especially if you obtained it earlier in adulthood. While you may have been diligent in securing your life insurance policy, failing to review or update the policy when you have significant life changes may result […]
Webster InvestmentsArticles
Saving for college
There’s no denying the benefits of a college education: the ability to compete in today’s job market, increased earning power, and expanded horizons. But these advantages come at a price. And yet, year after year, thousands of students graduate from college. So how do they do it? Many families finance a college education with help […]
Connect With Us
Learn more about Webster products, services and the communities we serve.
We’d love your feedback