Preparing for the Next Recession: Six Considerations for Retirees
As financial experts and analysts have been predicting for some time now, the next recession is on the horizon. With sky-high real estate and stock market prices combined with the fact that economic cycles regularly lead to recessions, it’s simply a matter of time. Just like fixing a leak in your roof before the rain comes, retirees should take steps to protect their retirement assets before the next financial storm hits. Here are six considerations to take into account:
1. Reevaluate Your Risk Tolerance:
When you’re no longer working, your tolerance for risk will decrease. As a retiree, your goal is to preserve your wealth and generate income from your retirement assets. Evaluate how much risk you’re comfortable taking with your investments carefully. It’s essential to make sure your investment strategies align with your goals, and you’re not risking more than you’re comfortable with.
2. Check Your Fees:
Fees can significantly slow down your retirement plan’s performance. Be sure to evaluate how much in fees you’re paying, including both published and hidden fees. Two types of investments, mutual funds, and variable annuities, often have higher fees. Additionally, ensure you’re not paying your financial adviser too much in fees.
3. Minimize Taxes:
Taxes can be your biggest expense for the rest of your life, particularly if you’ve accumulated a large IRA. With the current tax cuts set to expire in 2026, retirees have a limited time to take advantage of today’s lower tax rates. Consider strategies, such as a Roth IRA, to pay lower taxes overall.
4. Make a Retirement Plan:
The financial adviser and investment strategy that got you to retirement might not be the right person or strategy to get you through retirement. Be sure to have a retirement plan that aligns with your current goals and needs. Kirsner Wealth Management uses the Riskalyze Software Program to help calculate the amount of risk you want to take and have in your portfolio.
5. Be Disciplined and Risk Averse:
Retirees should be more disciplined and risk averse in good financial times so they can take advantage of the bad times. Revisit your investment strategies, goals, and tolerance for risk frequently.
6. Stay Informed:
Stay informed about how the economy is performing and where your investments stand. Regularly evaluate your retirement plan to make adjustments as necessary to preserve your financial health and well-being.
– Economic cycles regularly lead to recessions, and the next one is on the horizon.
– Retirees should reevaluate their investment strategies and goals to prepare for the next recession.
– Fees and taxes can significantly impact a retirement plan’s performance.
As a retiree, it’s essential to take proactive steps to protect your retirement assets before the next recession hits. Reevaluating your risk tolerance, minimizing fees and taxes, creating a retirement plan, and staying disciplined and informed are all critical components of preparing for the next financial storm.
Preparing for the next recession isn’t a matter of if, but a matter of when. Retirees have unique challenges and considerations when it comes to protecting their retirement assets. By staying informed, minimizing risk, and creating a retirement plan that aligns with their goals, retirees can take proactive steps to navigate the financial storm.