What You Need To Know About Retiring in a Recession

No matter what job you have or how well you have prepared for retirement, inflation still affects your everyday living expenses and this can greatly affect your retirement lifestyle.

What types of things should you be reviewing with your financial advisor when the economy looks like it is headed into a recession?

This is one of the numerous things Heller Wealth Management can help you with. Unforeseen circumstances arise and we know it’s hard to plan for every last scenario. That’s why we integrate the possibility of these scenarios happening into your retirement plan long before they happen.

In episode 112 of Life Unlimited, Larry Heller CFP® discusses subjects including how to know when the economy is in a recession, how to find out whether your retirement plan is suitable for a recession, how to analyze your retirement plan to strengthen it against inflation, what you can do if you are forced to retire, and so much more!

Read on for some more advice about navigating inflation and a recession in retirement and how you can integrate the possibility of a recession into every financial planning process.

How To Know When the Economy is in a Recession

In the latest episode, Larry states that by the time it airs, the second quarter of the GDP will have been released which will allow us to know whether we are in a recession or not.

 So where do you go from here?

Once we know that the GDP has declined for two consecutive quarters, then there is a recession. This is a good time to review your retirement plan and talk to your financial advisor, your spouse, and family members to decide whether it still makes sense for you to retire at the time you had planned on.

Just because there is a recession does not mean that you shouldn’t retire, it just means that you should take a look at your retirement plan and see whether retiring during a recession is still feasible for the lifestyle you hope to achieve in retirement.

If you are wanting more in-depth advice about deciding whether to retire during a recession or not, you’ll want to listen to episode 112 of Life Unlimited!

How To Find Out Whether Your Retirement Plan is Compatible With a Recession

Some retirements are more flexible than others, so depending on how you have formulated your retirement plan, you may or may not be equipped to face a recession.

You don’t have to figure out if your retirement plan is fit for a recession by yourself. Use your resources!

Contact your financial advisor, a knowledgeable family member, and talk to your spouse about this process. 

How can you find out whether your retirement plan is fit for a recession? Take a look at this list to get your thoughts flowing.

Here are some questions to ask yourself when deciding whether you should retire in a recession:

  • How much money do I have saved up in living expenses? Can I use them long enough to make it through the typical length of a recession? (Around 11 months)
  • Am I going to need to take out my investments in the stock market imminently? 
  • Does my retirement plan need to be heavily modified in order to retire in a recession? Or do I want to work a little longer so I can retire in the lifestyle I planned for?

Tune in to episode 112 of Life Unlimited to hear more advice from Larry HERE.

How a Financial Advisor Can Help You in a Recession

Like Larry has mentioned several times before, wealth advisors do a lot more than formulate financial plans. They are there to hold you accountable, give you confidence in your financial decisions, and be in your corner.

Financial advisors can help you decide whether or not your retirement plan is suitable for a recession and can tell you if you are able to retire as comfortably as you had originally planned.

The questions previously listed are the questions you can ask yourself, but wealth advisors offer a much more in-depth analysis of your retirement plan and what modifications need to be made during a recession.

Heller Wealth Management wants to help you achieve the retirement you have been dreaming of, even when there is a recession.

Listen to the episode for more on this conversation HERE.

2008 Compared to 2022

A topic that is briefly touched on in episode 112 of Life Unlimited is the comparison between the 2008 crash and the state of the 2022 stock market. More specifically, the difference in how people cut their losses.

In 2008, a lot of people did something called “stopping the bleeding”, which means they pulled out of some, or all of their investments in the stock market to prevent further losses. Although this may provide relief  at the moment, it does mean you lost money on paper.

In 2022, a lot more people have the mentality of ‘riding the wave’ and accepting their current losses…which are not permanent until they sell. You technically only lose or gain money when you sell your stocks. 

Hold, hold, hold. This is the simplest way to understand how to cut your losses in a bear market and an imminent recession.

You don’t want to be forced to take out your investments before they have the opportunity to rise in value again.

To learn more about retiring in a recession, listen to episode 112 of the Life Unlimited Podcast or talk to our team directly via our contact page.