The Impact of the Current Economic Climate on Retirement Planning.

The economy continues to fluctuate, leaving many investors understandably concerned about their financial future.

From political changes to the lasting impact of the global pandemic, the past few years have presented numerous financial challenges that affect planning for retirement.

At NJM Wealth Preservation Strategies, we understand that now more than ever, it is crucial to make informed decisions and adjust your retirement planning strategies to weather these uncertain times. 

No matter where you are on your retirement path, it's important to keep the following in mind to help you stay clear-headed during periods of economic downturns.

Market Volatility

Market volatility has been a significant concern for many investors in recent years. Fluctuating markets can lead to substantial losses for those who are unprepared, putting a strain on your retirement savings. 

Balance is key when it comes to investing in a volatile market. Being on the extreme end of either spectrum can cause an imbalance that, if correctable, will come at a cost.

This is why employing a diversified approach to investing, which involves spreading risk across a range of asset classes, will help to minimize the impact of market volatility and protect your retirement savings.

The appropriate diversification for your portfolio ultimately depends on how much you’re comfortable putting at risk, your time horizon and financial goals. Your asset allocation should adapt and change with these aspects over time. 

Before you start investing or making changes to your investment portfolio, it’s important to create a comprehensive financial plan and evaluate your wealth preservation strategy. If you are unsure of what your portfolio can withstand, it is beneficial to consult with a trusted financial advisor. 


Year-over-year inflation rates are slowing, but they may remain above the Federal Reserve's 2% target for some time. 

For near-retirees and the recently retired, steadily rising prices of day-to-day expenses can create an extra layer of worry and fear about whether hard-earned nest eggs will be large enough to sustain them through their golden years.

To help combat the effects of inflation, try incorporating assets with inflation-hedging characteristics into your investment portfolio. This may include real estate investments, commodities, or inflation-protected securities, which can help preserve your purchasing power in the long run.

Interest Rates

Changes in interest rates can affect the economy and move financial markets. When interest rates go up, it means that investors have to pay more for their investments, and it can be harder to make a profit from them. 

Knowing how this critical economic factor can affect the performance of your retirement plan can help you bolster your investment returns, and help avoid potential losses that could result from rate changes. 

Asides from staying in-the-know about current interest rate changes, there are several other strategies to consider to keep your retirement planning on track during times of rising interest rates:

  • Fixed-income investments: With higher interest rates on savings accounts or other savings vehicles (think a certificate of deposit (CDs) or money market account), you may earn a little more for every dollar. If you’re trying to leverage the way interest rates affect retirement plans, this can go a long way toward meeting your retirement-savings goals.
  • Consider annuities: One of the main advantages of annuities is that they can provide a guaranteed income stream that is not affected by market fluctuations. It's important to note that not all annuities are created equally. Variable annuities can be a poor investment for many people, while a short term fixed annuity could be a powerful tool in your investment portfolio as they have come a long way since those your parents may have owned.
  • Don’t try to time the market: Timing the market means trying to actively buy low and sell high. However, investing isn’t a game of shorts — it’s about the long haul. Sometimes the best course to take during a storm is to stay the course you’re already on.
  • Don’t use emotion: Regardless of your age or how much you have put away into retirement savings, it’s important not to panic. Talk with your financial advisor about the best course of action for you & be certain they are in fact managing your portfolio-not your emotions.

Social Security and Pensions

With the ongoing demographic shift and increasing life expectancies, the U.S and other nations across the globe are experiencing strains on their Social Security and pension systems. The latest news from the U.S Treasury Department stated benefits are scheduled to be depleted by 2034.

Such negative headlines about Social Security’s future may be affecting how prepared people feel when it comes to their own retirement. In fact, almost three-quarters (74%) of people say they cannot count on Social Security benefits when it comes to the money they will have in retirement. 

While we agree that you should not rely on social security for your retirement income, it is wise to assess the potential impact that Social Security benefits (or lack of benefits) has on your retirement goals - and develop a strategy to maintain your financial security. 

If your retirement is right around the corner, make sure you’re looking at ways to supplement your Social Security income long before you lose the safety net of your current employer’s income.

Help Offset Economic Challenges

It’s not all doom and gloom when it comes to securing your financial future in 2023. As an investor closing in on retirement, the following strategies can help you grow, protect, and distribute the money you've earned, saved, and invested.

  • Create an emergency fund: Even if you feel you don’t need one, consider starting an emergency savings account, separate from your checking and other accounts you use for regular expenses. Usually this is 6 months’ to 1 year’s worth of expenses.
  • Utilize tax-deferred accounts: The IRS has increased contribution limits for retirement plans, which means anyone saving for retirement can save more than ever in accounts like 401(k)s or IRAs. 
  • Reallocate and diversify: Investors have many ways to do this, but the most important thing to remember is to not keep all of your investments in the same few assets.
  • Delaying retirement: Pushing back your retirement date means more time to save. Alternatively, planning for a “soft launch” into retirement by working part-time will help minimize the impact of cutting off your employment income altogether.
  • Avoid emotional-driven decisions: Remember that financial plans were made based on long-term projections that account for market adjustments and bear markets. Always speak with your financial advisor before making investment changes. 
  • Find a trusted professional for help: One of your best resources is your financial advisor. By using a Wealth Preservation Specialist who knows both your goals and your money, you can better understand exactly what’s happening with your retirement portfolio and make necessary adjustments along the way. 

Next Steps

In this uncertain climate, many retirees and near-retirees are increasingly worrying about how the current conditions will impact their ability to live comfortably in retirement.

While the current economic climate presents unique challenges for retirement planning, with the right guidance and a proactive approach, you can still achieve your retirement goals. 

At NJM Wealth Preservation Strategies, we are dedicated to helping you navigate the complexities of retirement planning in this uncertain environment. By focusing on strategies to counter market volatility, inflation, low interest rates, and potential changes in social security and pensions, we can help you build a robust retirement plan tailored to your individual needs. 

Contact us today to learn more about how we can help you preserve and grow your wealth for a secure and comfortable retirement.