Staying Positive in Times of Uncertainty

Now that we're nearing the end of the year, we'd like to share this final installment of the Retirement Lifestyle initiative. We've decided to focus this edition on staying positive during a bear market (rather than making large pleasure purchases on a fixed income, as we originally planned). Considering that financial anxiety can have a profound impact on your post-retirement happiness, we believe this is a timely topic for this series.

In recent weeks, investors have been inundated with glum reports about government bailouts, stock market drops, job losses, and other economic mishaps. It's not surprising that a recent study published by the American Psychological Association (APA) found that negative news about the economy is causing significant stress for 8 out of 10 people—up from 66 percent in April.

Here are a few tips to help you minimize stress during these challenging times:

    Focus on the long-term
    When the markets are swinging up and down, it's hard to concentrate on long-term objectives. But remember that your investments are structured to meet the needs of your personal situation, factoring in your:
    • Long-term goals
    • Tolerance for risk
    • Time horizon

    Investments for long-term goals are typically invested more aggressively, which means they can be—and probably have been—more volatile. Keep in mind that you likely won't need to liquidate these assets in the immediate future, so there is time for them to recover from their losses and potentially grow even more. Alternatively, investments that support short-term needs are generally invested in strategies that seek to reduce volatility and risk.

    Although nobody can predict what will happen with our economy or when it will recover, you may find some comfort in the following information:
    • Post-World War II recessions have lasted an average of 10 months, while the longest two lasted 16 months.
    • The National Bureau of Economic Research (NBER) has reported that we've been in a recession since December 2007.

    Take care of yourself
    Anxiety of any sort can have negative effects on your health. According to the APA, stress-related physical and emotional ailments are on the rise in 2008. In the short term, stress can cause irritability, headaches, muscle tension, insomnia, and fatigue. Longer-term chronic stress can lead to more serious afflictions, like high blood pressure, heart disease, and diabetes.

    The economy is certainly not worth risking your health, so it's important to take care of yourself during this stressful period. Ways to combat stress include:
    • Getting outside for fresh air
    • Taking a daily walk
    • Riding a bike
    • Eating healthy foods
    • Getting plenty of sleep
    • Reading an enjoyable book

    You can also try relaxation techniques:
    • Meditation
    • Yoga
    • Massage
    • Deep breathing

    Concentrate on the positive
    Although our economic situation is quite serious, keep in mind that some media outlets have a tendency to sensationalize stories to attract a larger audience. This can cause unnecessary alarm. Try to find positive distractions, like watching an upbeat movie, listening to your favorite music, or committing to at least one weekly lunch with a friend.

    Help yourself by helping others
    Volunteering is another helpful distraction. Nonprofits often struggle in bearish climates when fundraising dollars tend to decline. Food banks, for example, have seen a notable increase in the number of people needing assistance to help feed their families. Animal shelters have also been particularly strained this year; they've received a large influx of abandoned pets from people who are experiencing financial or housing constraints. Organizations like these could use some helping hands.

    Count on us
    We take our commitment to our clients seriously—especially in times like this. We recognize that the economic downturn can cause emotional strain. And that's why we're here for you no matter what concerns you have, whether you're worried about the economy, the markets, or your personal situation. We're just a phone call away if you need us.
This concludes the Retirement Lifestyle series. We hope we've achieved our objective of offering you financial information and guidance to optimize your post-retirement journey. We are looking forward to introducing a new educational initiative in 2009.

2008 Commonwealth Financial Network