What you should (and shouldn't) do as a result of weak markets and high inflation

I’m sure you’ve looked at your recent retirement account statements and have read the headlines; the financial markets are substantially down and inflation is the highest it’s been in four decades.

Whether you’re still planning your retirement or are already living in retirement, here are some things to consider doing (or NOT doing):

• Have a plan – Make sure you have some sort of financial plan. Whether you do it yourself or work with someone to help you make one, having a plan helps ensure you’re not flying blind. A plan will help address what to do – or not do – in good times and bad. For example, a common knee-jerk reaction to bad markets is to sell when things are down. But, generally speaking, that’s the exact opposite of what a well thought out retirement plan would say should be done.
• Focus on what you can control, instead of what you can’t – You have no control over the financial markets, inflation or tax legislation. You have complete control over your investment allocations, investment selection and when you buy and sell things. You have at least partial control over how long you work, your expenses and your physical and mental health.
• Consider working longer, or part-time – One of the most financially beneficial things you can do for your retirement plan is working longer, even if it’s part-time. Depending on your financial situation, you may not NEED to work more. But if your plan is a bit constrained, working longer could be the best way to help the financial strength of your plan. Working longer not only helps minimize having to take money out of your savings, but it can also further add to your savings.
• Be cognizant of expenses – While you don’t necessarily have to live like a pauper, chances are there is some trimming of expenses you can do. Whether it’s spending a bit less on discretionary activities or even just comparison shopping for lower cost substitute products at the supermarket, reducing expenses is another great way to strengthen a financial plan.
• Make sure you’re not over or underinvested – Here is where having a plan will help you decide what the appropriate level of investment and risk is for you. Assuming you were properly invested to start with, a down market is not the time to sell out of positions. Just like an up market is not the time to be buying more.
• Take advantage of possible tax planning opportunities – If you planned on doing Roth conversions, a down market is a better time than not to do them as depressed asset prices mean you can convert more shares for a given dollar amount of conversion. Also, if you have positions at a loss in a taxable brokerage account and you wanted out of the positions anyway, now could be a good time to “tax loss harvest” to realize those losses.
• Be mindful of investment expenses and advisory fees – Do you know how much you’re paying in fees for your investments and - if you use an advisor - advisory fees? These fees may be higher than you think, and can add up over time. Now may be a good time to revisit what fees you’re paying and if you’d be better served for less fees elsewhere.
• Turn off the news! – Not to trivialize what’s going on in the markets and the world, but most of what you see and read is just sensationalist click-bait info to grab your attention. Tune it out, don’t pay attention to the day-to-day and instead stay focused on the longer-term big picture!