Starting to liquidate your portfolio now is probably the wrong move even if you are in your 60s. Here are a few more productive things you can do during the market turmoil.
With everything going on in the world, it can feel selfish — even petty — to be worrying about your 401 and IRA accounts right now.
Right-risking is what happens when the level of risk in your portfolio—generally reflected by the percentage of equity in your account—is appropriate for your time horizon. If you are in your 20s or 30s, your retirement account should hold between 80—95% in equities. Any less than that, and you would be under-risked.
But what if you are in your 60s? What if you need to start using some of that 401 or IRA for living expenses in the next year or two? What if you aren’t right-risked? Does that mean that it’s OK to start liquidating your portfolio? After all, you need to make sure you protect what you have, right? If you happen to find yourself in the position of needing some of that money, you might consider tapping your emergency savings instead of selling. If you must, you could sell a small portion of your investments, just enough to cover your needs, and make sure you rebalance your account to the appropriate risk level along the way. And remember this: a loss in your portfolio is a loss on paper, not reality, until you sell. Just like a gain is a gain on paper until you sell.