How Active Management Helps With Social Security and Market Volatility

While Social Security can be an important source of income, it often falls short of covering all expenses—especially with rising taxes and inflation. For many high-net-worth individuals, relying on investments to make up the difference can be stressful with increasing market volatility.

Active management offers a solution by helping protect your investments from market swings while pursuing growth opportunities, thereby creating a more stable approach to retirement planning.

At Heritage Capital, we specialize in active investment management and strategies for maximizing Social Security in Connecticut. With over 30 years of experience, our services are designed to reduce financial stress and replace uncertainty with clarity and confidence.

This article discusses how active management works to stabilize income sources like Social Security and protect your retirement during volatile markets.

The Challenges of Market Volatility and Social Security

Being heavily invested can be challenging as volatility rises, especially as you approach retirement. Market swings can quickly reduce your portfolio’s value, raising concerns about how long your savings will last. 

Market downturns can lead to difficult decisions about when to withdraw funds to cover expenses. Cutting back on withdrawals in a declining market may help offer some investment protection, but it will impact your lifestyle.

Social Security brings its own set of challenges. For affluent individuals in Connecticut, Social Security benefits are subject to federal taxation, and depending on your income level, a portion may be taxed at the state level as well. Although Social Security offers cost-of-living adjustments (COLA) to keep up with inflation, these adjustments often lag behind rising expenses.

Given these challenges, it’s wise to adopt a strategy that balances protecting your investments from market swings while optimizing income sources and managing taxes to avoid a higher tax bill during volatile periods.

The Benefits of Active Management in Volatile Markets

Active management takes a dynamic approach to investing, adjusting portfolios based on changing market conditions rather than following a passive “set-it-and-forget-it” model. This flexibility is especially valuable during periods of increased market volatility when simply holding onto assets may not provide enough protection or growth.

Key benefits include:

• Opportunity for higher returns: Active managers carefully research and select investments with the potential to outperform the market, giving your portfolio a potential edge. During volatile times, certain sectors or industries may perform better than others. Active management allows for strategically reallocating those areas, helping capture potential gains.
• Risk mitigation: By actively managing your portfolio, advisors can reduce your exposure to losses by moving away from underperforming sectors or asset classes.
• Custom-tailored strategies: Every retiree has unique financial goals and risk tolerances. Active management allows advisors like Heritage to create a personalized investment strategy aligning with your objectives.
• Adapting to market trends: Active managers monitor market movements in real-time, adjusting strategies to capture opportunities as they arise.

While active management doesn’t eliminate all risks, it offers a proactive approach to responding quickly to market shifts. This is especially important if you rely on both investment income and Social Security.

Active management may also offer tax benefits, such as tax-loss harvesting, which helps offset gains with losses to improve your overall after-tax returns.

How To Find a Financial Advisor for Active Investing

When searching for a financial advisor to help with active investing, consider asking the following questions:

• Do they specialize in active management, and how have they adjusted portfolios during volatile markets?
• What is their track record in delivering consistent returns across different market conditions?
• Are they a fee-only advisor? Fee-only financial advisors work solely for your benefit and are not influenced by commissions or product sales.
• How will they customize a strategy that fits your specific financial goals and risk tolerance?
• Do they have the expertise to help with investment growth and tax management?

The Role of Fee-Only Financial Advisors in Connecticut

A fee-only fiduciary, like those at Heritage Capital, is legally obligated to act in your best interest. With Paul Schatz’s AIF® designation (Accredited Investment Fiduciary), you can trust that he adheres to the highest ethical standards, always prioritizing your financial well-being. Paul and his team offer personalized strategies to protect and grow your investments, even in volatile markets.

Protecting Your Investments During Market Volatility With Active Management

Emotions often drive poor decision-making during volatile markets. Active management removes emotion from the equation using data-driven insights to guide investment choices. This helps you stay focused on your strategy, reducing the temptation to make rash decisions that could harm your financial future.

Here are some key strategies for volatile markets:

• Diversification: Spread your investments across different asset classes, such as equities, fixed income, cash,  commodities, and real estate, to reduce risk. This helps minimize the impact if one or more sectors experience a downturn. For example, Paul Schatz is known for his equity index and precious metals models, while his technical strategies also extend into other asset classes, offering a well-rounded approach to investment protection.
• Rebalancing: Regularly review and rebalance your portfolio to maintain your desired asset allocation. Active management helps keep your portfolio aligned with your risk tolerance and long-term goals, even as markets fluctuate.
• Risk management: Implement techniques such as stop-loss orders or adjusting asset allocations to limit potential losses during volatile periods.
• Maintain a long-term perspective: Active management helps avoid knee-jerk reactions to market swings. Heritage advisors focus on your retirement goals, making strategic adjustments as needed without letting short-term volatility drive decisions.

At Heritage Capital, our experienced financial advisors actively monitor market conditions and your personal situation. By implementing tailored strategies and adjustments, we strive to help your retirement plan stay on track, even during unpredictable market environments.

Partner With Heritage for Your Connecticut Financial Planning

We understand the challenges that come with managing investments in a volatile market. Our team, led by Paul Schatz, AIF®, is committed to helping you develop a customized investment plan that integrates Social Security with active management strategies.

Our fee-only financial advisors in Connecticut have decades of experience, and we prioritize your best interests by providing objective advice without hidden fees or commissions.

We’ll take the time to understand your unique situation and goals and work to develop an investment strategy that matches your retirement plan.

Contact us today for a free consultation.