How to Protect our Pension from Losses under COVID-19 Pandemic

The U.S. stock market's plummeting record has been broken as a result of the COVID-19 pandemic. On March 16th US stocks drop again after rebounding. By the close, the Dow had plunged nearly 3,000 points, its biggest one-day drop in history, facing the worst day for the American people since Black Monday in 1987. On March 18, U.S. stocks fell 7 percent at the open, triggering another 15-minute suspension.

In the face of market volatility, there is no so-called "correct" response standards. It is essential to consider carefully whether such an approach is in our current best interests before selling out in fear or entering the market because of greed. And for those who want to keep their pensions, how we should protect our retirement accounts is a matter of urgency when the stock index plunges. The market is risky and retirement needs to be cautious. Before making a financial decision, we need to assess our "risk tolerance" capabilities. We often hear this above, but to what extent is it too high to call "risk"? Is there an easy way to judge? Risk tolerance depends on a number of factors, including age, career and financial experience, and for young people, risk-taking can mean opportunities. The recent 3,000-point plunge in the U.S. market may provide an opportunity for this group to buy more securities at lower prices when the market falls. And in the long-term fixed-term index market, such as 401K, 403B, personal IRA, such patience may be effective, because we are still young, long enough to deal with the market ups and downs.

The dilemma faced by the retired family

When the market has fallen by 3,000 points as it has recently, the over-50s have a completely different idea and feeling of risk.

As we approach retirement, when the market falls as sharply as it has in recent times, our pension accounts will suffer a lot of losses, and less time will be recovered from that loss. Our thinking is completely different in retirement, and risk tolerance changes. We don't know how long we're going to live, and we're worried about the stock market crash, and we don't have the money to spend it.

Risk management for retired families

The stock market is a high-risk market area, and the market turmoil can make a drastic difference to our retirement accounts, rapidly shrinking the wealth we have accumulated in the first half of our lives. Therefore, as you approach retirement, finding a financial channel that does not lose money as the market falls, while at the same time having room for gains and value, is a must-do in the search for a safe retirement. Index and dividend insurance with a cash-value account "income guarantee" function is an option, while another way to "guarantee a lifetime retirement income" is to use annuity insurance products, we introduce what annuity insurance is.

In the investment channel risk pyramid icon, we can see that term deposits, money markets, fixed annuities, and index annuities are the most robust and conservative financial channels. These types of accounts usually provide a guarantee of the return on the principal and do not lose the principal due to the sharp swings in the market, so there is the lowest market risk in the general financial channels. And the U.S. stock market is a high-risk investment and financial management channels, the participants to the risk tolerance of the institutions mainly.

According to the mid-2018 data, U.S. institutional investors hold a market capitalization of 93.2% and individual investors hold less than 6% of the market value. In this high-risk market, individual retail investors not only need a lot of personal time, money and energy investment, but also face the natural advantages of competitive institutional investors in technical support, information acquisition, professionalism and so on, therefore, individual investors often in the stock market volatility, face greater risk of loss.

Summary

Annuity insurance can help protect retirement savings for retirees in today's dramatic market turmoil, protect people who want to avoid risk, protect safe-haven groups, and provide guaranteed lifetime income, thereby easing our fears about market volatility while bringing peace of mind