What happens to your retirement assets when the stock market crashes?
While you’re working, you might devote a portion of your retirement assets to “safe” investments, such as bonds or savings accounts, that won’t drop substantially due to a stock market crash.
What causes a stock market crash?
A stock market crash is caused by two things: a dramatic drop in stock prices and panic. Here’s how it works: Stocks are small shares of a company, and investors who buy them make a profit when the value of their stock goes up. The value and the price of those stocks are based on how well investors believe the company will do.
What happens to retirees when the stock market drops?
A steep drop in the stock market can be particularly devastating to retirees, who have few options to replace their depleted life savings. But there are a variety of ways for retirees to prepare for and cope with stock market declines so that their day-to-day income needs continue to be met, regardless of market conditions.