Concerns over your retirement during a time like this are certainly warranted. Prices have been increasing on everything from food to housing. In April, the consumer price index noted an 8.3 percent increase on goods and services from last year.
However, putting off retirement isn’t necessarily something you need to do. It’s important to sit down with your financial advisor, share your concerns and go over your options. Inflation is a part of the U.S. economy, and while it’s high right now, it’s not a reason to panic - at least yet.
Tips for Protecting Your Retirement Portfolio During Inflation
With inflation high and the stock market uncertain, here are some steps you can take to protect your retirement portfolio.
If you’re still making the same income, continue contributing to your retirement plan. You can take advantage of dollar-cost averaging, which means you’re investing your money in equal portions at regular intervals. You might not get as big of a return as if you were to invest lump sum money, but it is lower risk.
Diversify your portfolio
Your portfolio should include a mix of different assets, such as CDs, stocks and bonds. Even within these, your portfolio should have both growth and value stocks and mutual funds or exchange-traded funds. Also, investing in equities is a good way to outrun inflation.
Have cash on hand
It’s important to have cash available in case of an emergency. The best way to do this is to set up a savings account that is separate from your investments. This way, if you need money in a pinch, you don’t have to dip into your assets.
Get rid of debt
A more concerning issue than inflation is debt. Many Americans still have mortgages, credit card debt and even student loan debt. And if you have any adjustable rate debt, this could be a big problem with rising inflation. Paying off debt should be a top priority.
Manage your emotions
You want to make smart decisions - not emotionally charged decisions. This is why it’s important not to panic. If you do have concerns, talk to your financial advisor first. You don’t want to make a decision based on emotion and have that negatively impact your retirement savings.
Keep working in retirement
And the best way to preserve your savings? Keep working. You don’t have to work a 9-5 job. You can work part time or choose an entirely new field that you’ll enjoy more, such as retail or home health care.
If you are concerned about your investment strategy, contact Leonard Financial Solutions today. We can look over your retirement plan and determine the best ways to handle retirement and inflation.