Is October really a spooky time for your retirement?

October investing

October is an exciting month for many people because fall is in full swing and many are preparing for Halloween. However, October may frighten investors and those in the financial services industry because historically, some of the biggest market crashes have occurred during this month, and it’s also when cost of living adjustments are made for Social Security benefits

It’s critical for investors to remember that one month doesn’t make a year when it comes to the ups and downs of the market and investments. The notion that October is a time when investors should be particularly concerned about their portfolios is similar to other popular myths, including sell in May and go away. There’s always something that may shake the market, whether it’s economic forecasts or what a CEO says on social media. 

Instead of focusing on particular months, quarters or holidays, investors should base their decisions on what their financial and retirement goals look like. Portfolio decisions should be made based on their time horizon to retirement, what portfolio distributions they’re looking for and what their withdrawal rate will be in their golden years. For example, someone who’s nearing retirement shouldn’t wait to change the structure of their portfolio to transition it for a source of income until retirement. This change should happen three-to-five years out from their projected retirement date. One way to stay on track with portfolio structure is to meet with their financial advisor minimally once a year. 

Social Security’s cost of living adjustment is one thing during October that may have some investors on edge. Social Security trustees announce the annual cost of living adjustment to benefits, which can be a source of concern for those who rely heavily on Social Security. This benefit was originally created to be a safety net for workers, not the cornerstone of a retirement plan. By working with a financial advisor early and meeting with them regularly, investors can better prepare for their golden years.

Although the market may spook investors at times throughout the year, it’s important not to make any sudden decisions solely based on the market. Investors and financial professionals may not be able to control the market, but they can control how they prepare financially and their reaction to any changes in the market.