Retirement Planning During A Recession

Although recessions are well known as an unavoidable part of the economic cycle, experiencing them is never fun. In 1974, economist Julius Shiskin defined a recession as two consecutive quarters of declining GDP (Gross Domestic Product). For those of you who aren’t economists, that simply means that US business and trade is declining rather than growing. Navigating a recession at any point in your life can be stressful but there are steps you can take to protect your retirement assets.

If you are nearing retirement age, you may be asking if it’s smart to retire during a recession or whether you should wait it out. You may also be wondering how to protect your 401k from the market downturns we have experienced this year.

Al Lindsten, a certified financial planner who has been at Shelton for 16 years, has seen many market downturns and has ridden out several recessions along with his clients.

“Those approaching retirement age during a recession need to focus on real risk, not market volatility. It makes no sense to stress over every down day in the market. When my clients truly understand the purpose and design of their investment portfolio, it helps them to refrain from making a panicky emotional decision to move out of the market to cash at a bad time. That move can potentially have the opposite effect and increase the likelihood of not meeting their retirement goals.

Another Shelton advisor Matt Fry adds, “You should ensure that your portfolio is built in a manner that prepares for a recession and operates in good times and in bad. For example, during the pandemic, the stock market went down around 35% in six weeks. Fast forward… if you would have held steady until the first week in June of that same year you would have gotten most of your money back.”

Protecting your retirement assets during a recession is all about being prepared and not reacting emotionally to market changes. The advising team at Shelton takes the time to get to know you and understand your risk tolerance to create a customized retirement plan that you can trust.

Jeff Shelton, the Founder and President of Shelton Financial, says, “Even during a recession, if your account is going down more than the market is, that’s a problem. When the rubber meets the road, performance is important. We help you protect what you have by listening to you. We are in the relationship industry, and we want to earn your trust. Our portfolios aren’t cookie cutter; they are tailored to you based on what you value most.”

For more information on retirement planning in the current market, call 260.436.7006 and talk with our team today.