With 2023 posing challenges such as a potential recession, more market volatility and further interest rate increases, retirees and those saving for retirement may find it safer to stick to the basics and hunker down for another turbulent year.
Here’s five strategies to get through the year.
‘Ignore the noise’
“With the cross current investors are facing right now – pending potential recession, inflation, higher interest rates and drop in the markets – retirees and savers should continue to focus on the long term,” Rob Williams, managing director of financial planning at Charles Schwab. “Have a plan and ignore the noise in the market.”
With the potential recession looming, investors will likely be more emotional, Williams said.
“Investing is an emotional thing. Retirement is an emotional thing. Saving and investing in your own retirement can be very stressful,” Williams said.
This is the time to stick to your long-term plan that reflects your risk tolerance, said Matt Brancato, chief client officer for the institutional investor group at Vanguard.
“This coming year is not going to be without challenges. Stay focused on the long-term,” Brancato said.
Read: What’s the best way to take RMDs from your retirement accounts? Experts rate the top 3 strategies.
Safeguard money needed in the next two to four years
“Think about how much you’ll need in the next two to four years – for retirement or a child’s education – and not be exposed to risk for that amount,” Williams said.
Secure that money in safer short-term investment vehicles, such as CDs, high-yield savings accounts, and bond funds.
Not sure where to retire? Check out our personalized Where Should I Retire? tool
‘Don’t chase fads’
“Look at areas that have enduring investment opportunities. Don’t chase fads. That’s just not the path to take. Some firms are looking for the next great thing or free lunch and you want to avoid investment fads and focus on a long-term plan,” said Brancato.
Williams agreed, adding that retirees and savers should “contribute everything you can into a diversified portfolio. Swinging for the fences on a stock or two – for most people that doesn’t work out well.”
Read: 71% of baby boomers say they feel behind in saving for retirement
Start early
For those who still have many years before retiring, start saving as soon as possible. Don’t worry about timing the market or finding the perfect investment environment. Just get going.
“Have a plan and start early. Start saving 15% – start with something – and start soon. It’s all about time in the market and having a disciplined plan,” said Williams.
Take advantage of potential changes
Currently, Congress is crafting the final details of what is commonly known as SECURE 2.0, which would be an update to the 2019 measure called Setting Every Community Up for Retirement Enhancement Act.
While the exact timing of passage remains unclear, experts seem confident that the retirement reforms will pass by the end of this year, or potentially early next year.
Under SECURE 2.0, experts hope to see an increase in the required minimum distribution age to age 75, automatic enrollment of new workers into a retirement plan with the opportunity to opt out, and an increase to catch-up contributions older workers can make to their retirement accounts, among other changes.
Once the measure passes, learn what you can do to enhance your retirement savings, catch-up contributions or get started in savings.
“Anything that provides retirement savers the ability to catch up is really important,” Williams said. “Even if it doesn’t pass this year, we’re hopeful that it could pass in the new year. It has very significant bipartisan support to continue savers taking ownership of their own retirements.”
Do you have questions about retirement, Social Security, where to live or how to afford it at all? Write to HelpMeRetire@marketwatch.com and we may use your question in a future story.