Retirement Plan Update, Q4 2022
Market Recap:
The fourth quarter was relatively positive for global financial markets. Inflation data started to show a change of trend lower, which led investors to assume that the majority of interest rate hikes are done. This was positive news for both stocks and bonds, which rallied during the quarter. However, market volatility remained relatively high as data still suggests a high risk for recession.
A recession occurs with a broad slowdown in the economy, typically including an increase in unemployment, lower corporate profits, and a decrease in economic growth. Historically this leads to lower stock prices because growth slows down, and investors often move to a less volatile investment in bonds. Hearing about a recession and watching dramatic moves in markets might be scary, but it also creates opportunity for investors. After all, lower share prices allow investors – including retirement plan participants – to buy more shares with each contribution. As the recession ultimately concludes, markets generally enjoy a longer period of growth as the economy gets back on track
New Year - Fresh Start!
You might be thinking about kicking off some new routines to better your health in 2023. But what about your financial health? There are a few steps you might consider for your retirement plan.
How much are you contributing? Are you contributing enough to maximize any matching contributions from your employer? Have you received a raise that could allow you to increase your contributions without reducing your take home pay? New IRS limits for 2023 allow participants to contribute up to $22,500 per year. Participants age 50 and over can contribute an additional $7,500 for a total of $30,000 per year.
When is the last time you checked your beneficiaries for your retirement plan account? As a reminder, beneficiary designations on retirement plan accounts supersede any other estate planning you might have put in place. The new year is a great time to assess your beneficiaries and ensure any life changes are appropriately reflected.
Call your plan’s advisor with any questions!