Posted on: 21 October 2022
As more and more experts foresee an economic recession coming and inflation remaining high for the time being, Americans planning for retirement in the near future may be worried. Will your retirement remain stable? How can you weather rising costs of living and the potential for low wage growth? Here are a few steps you can take now to make sure you're financially prepared to retire on schedule.
1. Work with a Planner.
Financial planners are trained to look at the big picture of your finances and use their expertise to reach your goals. When retirement gets closer, everyone should meet with a professional to make sure they're doing as well as they can be in their circumstances. This is more important now, and they will help you factor in inflation when forecasting your needs.
2. Make Yourself Flexible.
Are both your income and expenses as flexible as they could be? A high rate of fixed expenses — like a mortgage, debt payments, or vehicle loans — makes you less nimble if the cost of living rises. Look for ways that you can adjust your spending and sources of income as needs change.
3. Build a Cash Buffer.
If you may want to (or need to) retire during a recession or period of higher inflation, you may not want to be locked into selling stocks or withdrawing more than planned from retirement accounts. In this case, a liquid cash buffer can help you weather the early years without losing too much value too early.
4. Look for Bigger Moves.
While most people try to save on expenses or increase income by small increments — such as cutting back on the proverbial $5 cup of coffee each day — one or two broad strokes could save your retirement much faster and better. Downsizing your home or moving to a low-tax or low-cost-of-living state can save your retirement even with fewer small inconveniences.
5. Check Your Risk.
Most Americans have some or all of their retirement savings in the stock market. Avoid the temptation to sell your stocks rashly during a downturn. But, do assess your risk tolerance and diversification with a financial professional to be sure you're not at unnecessary risk.
Want more tips? No matter how long it may be before you retire, now is the time to plan ahead. Meet with a financial planner who offers in retirement planning in your state today.Share