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Could we see a recession? How to plan 401k's and IRA's in a fluctuating market

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Inflation

Increasing costs for food and gas have some American’s worried our country could fall into a recession.

Right now, experts say there’s no immediate signs of a recession. Unemployment is historically low, but we’re tip-toeing a fine line.

Inflation does present the danger of an economic slow down, but we haven’t crossed that line just yet.

“This is just the natural course of an economic slowdown, said Derek Berry, an Economics professor at Calhoun Community College.

Berry, said if a recession is a concern for you, put a big purchase, like a car or boat, on the back burner.

Another piece of advice, if you see your employer laying people off, cut back on spending’s. That way you can prepare for any twists and turns ahead.

But, with all these tips, comes the risk of putting us into an economic slow-down.

“So slowdowns in the consumer spending’s often do sort of trigger these recessions.” said Berry. “When underlying causes are there, that ripple through consumer spending kind of magnifies it”

If inflation continues and interest rates rise, Berry said eventually, the economy will slow sown.

Another concern for American’s may be the status of their retirement funds.

Christopher Smith, an Accredited Asset Management Specialist, said don’t panic if you see your funds plummet. The market will comes back.

If that’s not re-assuring, Smith said it’s a good idea to redo your risk assessment. Depending on how your portfolio is allocated, you may be taking on much more risk than you’re comfortable with.

He recommends sitting down with a financial advisor to start an on-going conversation in regards to your funds.

If retirement is nearing, Smith said that’s also not a reason to panic.

“If you’re getting ready to retire, say within the next 12 months, that’s where you really need to talk to a financial professional, ” said Smith,

“Make sure that your goals are still there, that they’re still set, you can make them.”

That’s when you can start talking about income replacement. “Using that money to work for you, how you want to start drawing that income out of your portfolio,” said Smith.

Smith said it’s not a good idea to keep checking your account balance. The erratic and fluctuating market is likely to continue, but it will bounce back.

Smith said prior to 2020, the market was on an unprecedented run with a solid decade of growth. Around every 3 years the market runs into a bear market, which is what we’re seeing right now.