Stock market declines can rattle retirement savers. What about when the market plunges, as it did at Monday’s opening, falling deep enough that a circuit breaker was triggered?
MagnifyMoney, a LendingTree subsidiary, in October asked 740 Americans with a retirement savings account what percentage decline they could tolerate before abandoning stocks.
Nineteen percent of respondents said they would tolerate no more than a 5% market decline before giving up on stocks for retirement, even though slightly larger declines are becoming commonplace in today’s market, according to MagnifyMoney.
A third of investors in the survey said they could tolerate up to a 10% market decline before they would take their money and run.
Only 22% of investors said they would leave their retirement funds in the stock market no matter how large a decline.
“Volatile markets can make us feel uncertain or scared about the future, and our survey shows that many Americans’ first instinct is to flee with their money, locking in a loss which may leave them out of potential market rebounds and meaningful gains,” Josh Rowe-Heupler, general manager of investing for LendingTree/MagnifyMoney.
“Anxiety around the stock market is normal, but that doesn’t mean investors should automatically act on those emotions.”