Whether you’re planning to retire before the end of the year or you’re worried about how the looming recession might affect your retirement in the coming year, don’t panic. While you don’t necessarily have to worry about being laid off, there might be some concerning moments regarding your involvement in the stock market. Even though a recession is going to be a bit unnerving, as long as you have a good financial plan, you can avoid some of the stress.
What Causes a Recession?
As a country, we’re no strangers to recession. We even had one in the early months of 2020, but it didn’t get much media coverage since we were dealing with more pressing issues. However, the two-month-long recession was the most serious since the Great Depression. In those two short months, the GDP fell 19.2 percent, and unemployment shot to nearly 15 percent.
So, what causes a recession? A recession occurs when the demand for goods surpasses a country’s ability to produce them. This snowballs into high prices for goods (that pesky supply and demand), which means businesses have to spend more, reducing earnings and might result in lay-offs or a cut in employee pay. Suddenly employees aren’t making enough to cover rising costs, and, well, we’re familiar with the rest.
If you’re retiring, this snowball effect of economic uncertainty and chaos can be concerning. However, a recession during your season of retirement doesn’t have to mean doom and gloom for your financial portfolio.
What Can You Do to Protect Your Assets?
If you’re about to retire or it’s in the near-ish future, there are some things you can do to protect your assets to reduce personal economic hardship, even if a recession occurs. Here are some ways you should prepare:
- Save Your Money: While losing your job right before retirement seems unlikely, it’s not impossible. Having an emergency fund is crucial as a recession approaches. Most financial planners recommend having at least six months’ worth of expenses in your emergency fund. But remember, something is better than nothing.
- Pay Your Debt: Building an emergency fund might be hard if you’re also trying to pay off debt, but if you’re able to, paying off any existing debt will help your financial situation tremendously. It’ll also improve your credit which might help your borrowing potential later.
- Stash Away Some Cash: We’ve all heard horror stories about mattresses with squirreled away cash getting thrown away, so we’re not suggesting that. However, if you start taking cash out of your savings or checking account, make sure you keep it somewhere safe. Make sure safe codes are added to your will, so your money is readily accessible to any beneficiaries.
- Be Cautious about Investing: Now is not the time to start investing, and it’s not the time to panic and cut your losses. While riding out the recession with your investments falling in value might seem daunting, you could be losing hundreds or thousands of dollars if an investment falls and you cash out.
How an Indiana Estate Planning Attorney Can Help
Estate planning can be a complex and overwhelming process. An estate planning attorney can help you navigate the legalities involved in creating an estate plan, ensuring that your wishes are properly documented and legally binding. Here are some of the ways an estate planning attorney can help.
- Provide legal knowledge: Estate planning attorneys are trained professionals who specialize in creating estate plans. They can help you navigate complex legal issues, including tax laws, probate, and trusts. They can also help you understand the legal implications of your decisions and ensure that your estate plan meets all legal requirements.
- Ensure that your wishes are documented properly: A common mistake in estate planning is failing to properly document your wishes. Estate planning attorneys can ensure that your estate plan is properly drafted and executed. This includes creating a valid will, naming beneficiaries, setting up trusts, and drafting other important legal documents.
- Help you avoid common pitfalls: Estate planning attorneys have the experience and knowledge to help you avoid common mistakes that can result in unintended consequences. They can help you navigate issues such as probate, estate taxes, and asset protection, ensuring that your estate plan is optimized for your specific situation.
- Provide guidance on complex family dynamics: Estate planning can be particularly complex when dealing with blended families, stepchildren, or other complex family dynamics. An estate planning attorney can help you navigate these complex issues and ensure that your wishes are properly documented.
- Help you plan for incapacity: Estate planning is not just about what happens after you pass away. An estate planning attorney can help you plan for incapacity, including drafting documents, which can help ensure your wishes are followed if you become incapacitated.
- Help you update your estate plan as your life changes: Your estate plan should be updated regularly to reflect changes in your life such as births, deaths, marriages, divorces, and retirement. An estate planning attorney can help you update your estate plan to ensure that it continues to reflect your wishes and meets all legal requirements.
Estate planning can be a complex process that requires legal expertise and careful consideration. An estate planning attorney can help ensure that your wishes are properly documented and legally binding, and can help you avoid common pitfalls that can result in unintended consequences. They can also provide guidance on complex family dynamics, help you plan for incapacity, and help you update your estate plan as your life changes. By working with an estate planning attorney, you can have peace of mind knowing that your assets are protected and your loved ones are taken care of according to your wishes.
Ready To Get Started? Contact Our Indianapolis Estate Planning Attorneys
If you’re wondering whether or not you need to start preparing your assets for a potential recession, Applegate & Dillman Elder can help. It’s always better to have your estate and financial documents professionally drafted and organized, especially as we enter an uncertain economic climate. Contact us online or call us at (317) 492-9569 to schedule a consultation with our experienced estate planning attorneys at one of our three offices in Indianapolis, Zionsville, or Carmel today.