The year 2021 has certainly been interesting so far. A lot has happened, and many changes have occurred over the first six months of the year. This sets the stage for a second half of the year that will most certainly be busy, especially with many planning deadlines and requirements due by the end of the year. So what factors will affect your retirement plan for the rest of this year?
During the first six months of this year, we have all dealt with inflation, the new Covid 19 Delta variant, Federal Reserve actions, new proposed tax laws and market volatility. Of course, all of these factors can and will have major effects on a retirement plan. And, all of these factors, and more, will again affect retirement plans for the rest of this year.
The Fed Chair is required to testify in front of the United States Congress twice per year. The topics discussed at the recent Fed Chair meeting were rising inflation (which is increasing at its fastest pace in a decade), employment and the economic recovery. As of now, it appears the Federal Reserve will continue its policy of supporting the markets and keeping interest rates low.
As of June 2021, according to the U.S. Census Bureau, consumer spending has skyrocketed by almost 18%. Pent up demand is definitely showing up in the economy. This is starting to cause some issues in the supply chain. Many products, such as cars, are unavailable. The second challenge is having enough employees to serve the demand for shopping at small businesses and restuarants.
The overall markets have been on a good run so far this year. Many professionals say the markets are on a ‘sugar high’ with all the money being thrown at the economy. However, volatility has picked up substantially recently, and even in the best of markets, pull backs and/or corrections occur. Since 1980 the S & P has experienced an intra-year decline of 10% or more 23 times. Corrections happen and for good reasons. Do not be surprised if a correction occurs before the end of the year. Thus, it will be important that your investment strategies are set up to make adjustments as market conditions change.
A lot is happening and changes are occurring. It is imperative to keep your retirement plan updated and accurate based on all the changes, and of course, as tax efficient as possible. To obtain the most up to date and relevant retirement education, visit the Prepare Institute website (www.theprepareinstitute.org) to find a retirement course or class near you.
Content is for educational and informational purposes only. It is not intended to be used as the sole basis for financial decisions, nor should it be construed as advice designed to meet the particular needs of an individual’s situation. You should contact your retirement and tax professional before utilizing any of the information in this article.