With the record highs that we saw in the market in 2021, it is time to consider what will happen in 2022. There are signs that we are on the road to a correction, so it is time to consider a possibility of downturn. It is important to consider the course of your retirement when there is still market volatility, inflation, and a lingering pandemic.
What’s Up with the Federal Reserve and the Wrap Up of the Stimulus Program?
The Federal Reserve has plans to slow down the stimulus program in 2022 which could lead to a domino effect of quarter-percentage-point increases well into 2023. The uncertainty of this change in policy and the future can cause instability in the market which can take a toll on earnings and stock prices. While you are unable to plan around the state of the market in the days of your retirement, you can have a plan to protect your earnings in the case of a negative downturn or unstable market.
Inflation Increases
Have you considered what high inflation can do to your retirement savings? The impact can be long term if we continue on this market trend. The inflation rate rose to 6.8% in 2021, reaching the highest percentage since 1982. The last time we saw a percentage over 5% we were struggling through the Great Recession. If the rate remains this high for the next 20 years, or at 2% for example, the buying power of your million dollars in savings would decrease to $672,971. The thought may feel concerning, but luckily there are ways in which we can plan for the risk of inflation.
The Lingering Pandemic
Since March of 2022 we have experienced the effects of COVID-19, and unfortunately will continue to see them for the time being. The labor and product shortages are an ongoing problem and are unfortunately are one of the main triggers of the increasing inflation. The economy is struggling to fully recover, and as we continue to see problems like cancelled flights and spikes in raw materials prices, it will be a while until we are back to “normal.” But with hardship comes possibility, and we are here to keep your money safe and plan for a turbulent future! Reach out to Moore’s Wealth Management today to get started.
