Skip to content

What Market Volatility Means for FRS Investment Plan Members in 2025

Picture of James Gates, CFP® Investment Advisor Representative of GWN Securities Inc.

If you’re in the FRS Investment Plan, your retirement outlook depends heavily on market performance. Unlike the Pension Plan, which promises a lifetime monthly benefit, the Investment Plan is tied directly to the ups and downs of the markets.

With 2025 being an highly volatility year for the market — from interest rate uncertainty to global events — Investment Plan members need to understand how these swings affect account balances, long-term planning, and retirement confidence.

How Volatility Affects Your FRS Investment Plan Balance

The value of your Investment Plan account changes daily based on the underlying funds you’ve selected. Market downturns can temporarily reduce your balance, while strong market periods can boost it.

  • Short-term impact: A correction or bear market can feel alarming when you log in and see your balance down 1–20%.

  • Long-term impact: Over a career, volatility often smooths out, but how you react to it often matters more than the swings themselves.

The key takeaway: volatility is normal, but your time horizon and withdrawal strategy determine whether it becomes a problem.

The Role of Risk Tolerance and Time Horizon

  • Younger members (more than 10–15 years from retirement) can generally ride out volatility, since markets historically recover over time.

  • Mid-career members should check whether their investment mix still matches their comfort level and goals.

  • Nearing retirement or in DROP — this is the group most affected, since a large downturn right before you retire can reduce available income or delay your plans.

Common Mistakes During Volatile Markets

  1. Selling low: Switching to conservative funds after losses, locking in declines instead of letting balances recover.

  2. Chasing performance: Moving into last year’s top-performing fund, only to experience the downside.

  3. Ignoring diversification: Putting too much into one sector or fund, which magnifies losses when that sector struggles.

  4. Forgetting the long view: Panic decisions can do more damage than market volatility itself.

Strategies for Navigating Market Volatility

  1. Review Your Allocation: Ensure your mix of investment choices matches your age and retirement horizon.

  2. Focus on What You Can Control: Contributions, withdrawal timing, and diversification are in your hands — market swings are not.

  3. Seek Professional Guidance: A qualified advisor can stress-test your Investment Plan under different volatility scenarios and help you make informed decisions about your investment allocations.

Final Thoughts

If you’re in the FRS Investment Plan, volatility in 2025 isn’t a reason to panic — it’s a reminder to review your strategy. Market swings are inevitable, but your retirement success comes from how you prepare and respond.

By staying diversified, aligned with your time horizon, and focused on long-term goals, you can navigate volatility with confidence.

If you’d like a personalized review of how your Investment Plan is positioned for the years ahead, we can walk through your allocations, and help build a plan that fits your goals.