Managing Retirement Risks: Safeguarding Wealth in Uncertain Times

Geopolitical tension. Political turmoil. Social unrest. High inflation. Climate crisis.

It’s the world that we currently live in–and it’s creating a high level of uncertainty for everyone everywhere. Not to be excluded from this uncertainty is market volatility–and a direct result of this market volatility could have an impact on your wealth management and retirement planning. In this post, we’ll take a deeper look into the impact that these uncertain times can have on your family wealth management strategy and offer actionable insight to help safeguard your wealth during these times of turmoil. Read on to learn more:

Retirement Stats: What to Know

Are you saving enough for your retirement? According to studies, most people aren’t saving enough to warrant a comfortable retirement. And those who are deemed to be saving enough could be subject to market volatility based on the variables that we ticked off earlier in this post. The good news is that with some proper planning, you can largely avoid some of the pitfalls that many individuals find themselves in when it comes to their wealth management and retirement planning. Throughout this post, we’ll offer strategies for safeguarding wealth in these times of uncertainty and also discuss how using an investment calculator can help keep your financial goals on track.

Safeguarding Wealth in Uncertain Times

The uncertainty that we’re experiencing today doesn’t look to calm down anytime soon, if ever. But it’s not all doom and gloom as it pertains to your personal wealth and retirement planning. Here’s a look at four strategies to safeguard your wealth during times of uncertainty.

Prepare accordingly

Preparing for retirement is key both from a mental and financial standpoint. And you can argue that both are equally important when it comes to wealth management. Proper preparedness can help with both. From refraining from making emotional decisions to diversifying your assets, there are many ways you can safeguard your assets and better protect the wealth that you’ve earned over time.

We all know there’s uncertainty and volatility in the market. This underscores the importance of protecting your wealth. There are several ways to do this and lessen the blow of any market downturn. Some tactics include:

• Building a cash reserve emergency fund to cover any essential living expenses if things really go haywire. It’s best practice to plan this emergency fund to cover at least 3 months’ worth of your living expenses. This can help provide a nice buffer in the event of a medical emergency, unexpected job loss, or other unforeseen life event.
• Diversify your assets: We’ll get into more of this later, but there could be significant strength in diversification.
• Hedge any risks: This can help offset or reduce any potential losses from significant movement.
• Work with a qualified financial advisor: A good financial advisor can be a true ace-in-the-hole when it comes to managing wealth, planning for retirement, and just ensuring you have a favourable overall financial future.

Stay in it for the long haul and avoid emotional decision-making

It can be easy to base every decision on the ebbs and flows of the market, and it’s generally something that you should avoid. Remember, you’re in it for the long haul, and your investments are going to increase and decrease over time. Making decisions based on your emotions is usually a recipe for failure. Always remember that recovery is inevitable and markets are eventually going to stabilize over time. Don’t react on impulse to any short-term losses to sacrifice long-term gains.

If you want evidence of the cyclical market and how markets tend to be resilient, just look back a few years to the onset of the COVID-19 pandemic. While stocks initially declined at the start of the pandemic, they gained nearly 80 percent only a year after they hit their pandemic lows. It’s a key example of how markets will eventually stabilize and return to a growth trajectory, as well as why impulse reactions aren’t good retirement planning strategies.

Diversify your investments

As we said, there’s strength in diversification,and that’s why a good wealth management strategy involves ensuring that you’re not putting all of your eggs in one basket.

Diversifying your assets can better help you withstand any ebbs and flows in your financial performance. What’s more—diversifying your assets can help you improve your financial performance and get you closer to your retirement and future goals.

Get ahead of inflation

Inflation has been one of the big stories over the past several years—and it’s important to account for it when it comes to planning your retirement. It can be especially important to manage if you’re nearing retirement age or if you’re thinking ahead to retirement 20 years down the road. Generally speaking, the further you’re out from retirement, the more you’re going to have to compensate for inflation over the years. Ideally, as inflation increases, so do your wages. But that’s not always the case.

So what’s the best way to get ahead of inflation? Start with a plan and stick to it. Don’t think you can set up a realistic plan by yourself? Work with a financial advisor who can help you navigate inflation and adjust your assets accordingly. In some cases, navigating it may mean allocating more to your retirement account(s) each week or month. In other cases, there may be more specialized strategies that may be necessary.

How is Your Retirement Planning Going?

So how is your retirement planning faring in these uncertain times? One simple way to check to see whether your financials are on track is to use an investment calculator. The calculator will let you plug in your age, your income, your current retirement savings, and your current annual savings to see if you’re on the right track when it comes to retirement. Such tools can help provide you with actionable insight to make adjustments or discuss options with your financial planner.