Jobs and the American economy have been two of the major topics leading in to the presidential inauguration. Despite a falling unemployment rate, many people young and old are concerned about retirement plans, whether they are connected to Social Security or their 401(k) plans. The question is whether or not you should change your retirement plans to have a secure future.
Since the November 8th election, the stock market has moved towards the 20,000 mark and as recently as this week, news about a growing U.S. economy into 2018 has been predicted by at least one international bank.
The current reality is that there is much economic optimism with the new president, but if or when that optimism converts into actual money in your pocket remains to be seen. Reassessing your retirement plan is an issue that is divided into two main groups.
Working people under the age of 50 should be ready to move their available retirement funds to different investment vehicles. The rising stock market is not found in a specific sector but across the board. Converting cash into stocks with a reasonable upside is a safe move. Additional hard currency investments such as gold should be left alone, but because the level of future economic prosperity is uncertain you should slowly increase your investment in these positions.
Despite the potential for significant economic growth, people who are near or are currently in retirement need to exercise caution in making any changes to their retirement plan. The most important reason is that any money you lose will take time to recover, something that may either not be possible or potentially have a negative impact on your current lifestyle. Should you be tempted to take a measured risk into the stock market, be aggressive but only invest money you can afford to take a short term loss on.
If We Had A Crystal Ball
A growing economy is likely to raise interest rates, as the Fed has just done this past month. One historic line of reasoning about the economy is that it is cyclical, so whoever is president has little to do with a capitalist, market-driven economy. Given the interest rates since the Great Recession, a bout of inflation is likely to arise in the near future. How this affects your retirement plan is perhaps the biggest consideration over the next
One of the most important differences with the new president is that he is taking a personal and active role in influencing job creation and companies to stimulate job growth and investment. Economic cycles notwithstanding, this president has the potential to up end what has been traditionally been considered as a free market economy with minimal government interference. Whatever the future holds, this is a particularly good time to keep a close watch on your retirement plan and prepare to make the necessary changes to protect your current positions.