When the market is rising it’s easy to feel confident about your retirement savings and to assume buy-and-hold or repeated purchases will always work. Strategies such as buy and hold, dollar cost averaging, and certain annuity products can be sensible parts of a long-term plan, but they are not immune to market cycles or product rules.
Strategy versus Emotion
Buy-and-hold and dollar cost averaging have been used for decades because they help investors avoid timing the market and can capture long-term growth as markets recover. History shows many well-known stocks and diversified portfolios regain value over time after sector downturns.
Annuities also play different roles depending on their features; some products offer guaranteed income or minimum returns while others expose you to market risk. For more detail on product types and how they fit into retirement strategies, see Income Annuities.
Focus on Making Goals and Reaching Them
Your retirement plan should be built around your goals, time horizon, and risk tolerance rather than short-term market moves. Selling low after a decline usually works against long-term goals, while continuing disciplined investing can let you take advantage of lower prices.
If you need guidance to align investments and distribution rules with your objectives, a planning overview may help; consider reviewing Planning for Retirement: Tips and Insights for practical steps to stay on track.
That isn’t to say you should never change course: some companies or sectors may warrant trimming or exiting positions, and annuity subaccounts or withdrawal choices sometimes need adjustment. Getting professional help can provide an experienced point of view when decisions are difficult—if you prefer, you can talk to an agent about your options.
Liquidated earnings are subject to ordinary income tax, may be subject to surrender charges and, if taken prior to age 59 1/2, may be subject to a 10% federal income tax penalty. Guarantees and payment of lifetime income are contingent on the claims-paying ability of the issuing insurance company.
Frequently Asked Questions
What is dollar cost averaging?
Dollar cost averaging means investing a fixed amount on a regular schedule so you buy more shares when prices are low and fewer when prices are high, which can reduce the impact of volatility over time.
When should I consider selling during a downturn?
Consider selling if fundamentals have changed (for example, a company is failing) or if the position no longer fits your plan; avoid selling solely out of fear of temporary market moves.
How do annuities help with retirement income?
Some annuities offer guaranteed lifetime income or minimum returns, which can add predictability to retirement cash flow, but features and fees vary by product.