As people ease into retirement, staying active in the stock market could be a way to help bridge the gap between the regular stream of income they were used to and the stream of income they’ll need in this new stage of life.
JJ Kinahan, Chief Strategist for TD Ameritrade, explores the topic of trading into retirement, and ways that accessibility to technology and smart trading routines could be key.
Q: How does the advent of mobile trading, better education and training, and self-empowered research enable folks who once dabbled in trading to devote more time to trading now that they’re retired?
JJ: The beautiful thing about mobile apps is they truly allow for the ability to trade anytime, anywhere. If you’re retired, you now have time to pursue many interests, and have the ability to do so without being chained to a desk, so markets won’t monopolize your time.
Q: What about couples who trade in retirement? Does this work?
JJ: The thing I see about couples who trade in retirement is they’ve often worked out the brains and the nerve partnership. One does the research and suggests entry and exit levels. The other executes and manages the positions. It can even be a way to keep the fights to a minimum, as each person can focus on their role.
Q: What’s the secret to a long-lasting relationship (ups and downs) with financial markets?
JJ: Defining your risk tolerance and keeping your position sizes to a manageable level. I think the one thing that seasoned traders are more conscious of is keeping their risk well defined. Retirees are not necessarily positioned for a major hit to equity, as they may not have the time to recoup their losses.
When all is said and done, it might be helpful for retirees and soon-to-be retirees to keep in mind that while their time demands and financial goals may change, the markets will always be there. Now more than ever, there are trading tools and resources to help people stay connected in ways that fit their lifestyle–and potentially help generate the income stream needed to help sustain that lifestyle.