Inflation and Potential Recession Put Retirement at Risk
Detroit, MI
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March 08, 2023 02:52 PM Eastern Standard Time
Experts have been ringing the recession alarm bells for some time. If you’re considering retiring soon, you may be worried about what that means for your golden years — and you may have reason to be nervous or stressed. A majority of retirees (77%) and non-retirees (72%) say they’re worried about a recession affecting their plans, according to a recent Kiplinger survey.
Pre-Retirees and Retirees Face an Uncertain Future
For starters, the value of your nest egg has likely taken a dip — the S&P 500 lost over 19% in 2022. Bonds have fallen similarly. But the stock market isn’t the only thing making you feel less than optimistic about retiring. A number of additional factors may be affecting your retirement plans, including market volatility, the financial security of Social Security, rising healthcare costs and inflation, which has remained at record-high levels.
“Adults above the age of 50 have a number of concerns right now,” said Retirable CEO and Co-Founder Tyler End, a certified financial planner (CFP®). “Inflation and a potential recession are concerns that are top-of-mind for many of our clients as they approach retirement. As more Americans move into the decumulation phase of their retirement plan, inflation will make a big impact on their day-to-day life.”
Case in point: More than 70% of those 50 and older are worried that inflation will cause serious hardship during retirement, the Kiplinger survey found.
Understanding Inflation’s Effects
Inflation has been consistently high for the past year, driving up costs and reducing the purchasing power of savers. This is a cause for concern for many Americans who are looking ahead to their golden years and wondering where to put their money during an inflation surge.
Because interest rates are rising, the real — or inflation-adjusted — value of retirement portfolios dropped, which means if you’re retiring soon and need to withdraw your money, you’ll have less purchasing power.
“Simply put, you will need more money to buy goods and services in this environment,” End said. “Daily costs will be more than what you may have budgeted for. These changes will affect how you plan, invest and spend during retirement.”
Say you plan to withdraw $25,000 each year in retirement and your retirement lasts 25 years. If inflation is at 4%, your exact same lifestyle will cost you $66,646 at the end of your retirement.
How to Recession-Proof Your Retirement
You can’t control the market — or the economy for that matter — but you can control what you decide to do about the current landscape. Taking the wheel on your finances during a recession can restore feelings of control and lower stress — and save you money. The sooner you act, the more likely you’ll enter your retirement (somewhat) on top.
Retirable, known for its holistic approach to retirement alongside the ongoing care of an adviser, recently released its guide “How to Recession-Proof Your Retirement.” Written by its team of certified financial planners, Retirable’s free guide helps pre-retirees and retirees gain a better understanding of how to plan, invest and spend throughout retirement.
The guide provides a playbook for adults aged 50-plus to help withstand any economic situation, including:
Planning advice to boost your savings, consolidate your debts and use your greatest assets
Ways to balance your investments, be smart with investment fees and lower your tax burden
Retirement income strategies and resilient spending plans to help you embrace the unknown
Retirable is designed for the 50 million Americans approaching retirement in the next decade without a formal retirement plan. Retirable is on a mission to provide ongoing management from a dedicated fiduciary adviser to help clients spend retirement income efficiently, make savings last and navigate key decisions throughout retirement.
Download your free copy of “How to Recession-Proof Your Retirement” and give yourself the clarity and confidence you need to weather any economic storm.
This post contains sponsored advertising content. This content is for informational purposes only and is not intended to be investing advice.
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