Is this year 2000 or 2008 revisited?
Whenever there are significant corrections on Wall Street we all get nervous about being in the market. This time, compounded by higher inflation, we want to remind everyone not to make foolish moves and to utilize every available opportunity. This is a strange time with market decreases, real inflation pressures and world political uncertainty.
Each of our situations are different, but the few things we all need to be reminded of are these:
If you are in the market, and if you can afford to do so, now is the time to maximize your contributions into your retirement plan. Stocks are on sale! Once the market repairs itself the larger your volume when your plan is at the bottom the more quickly your plan recovers, usually to a higher level.
If you find inflation slamming you with the cost of things like food and fuel and you do not have enough income to meet even your essential expenses, postpone contributions to your retirement plan. The trade off is that you might have to work a bit longer to reach your retirement goal.
If you are covered in a High Deductible Health Plan, then you are eligible to contribute to a Health Savings Account which can reimburse the known medical, dental and vision expenses of your family. It is significantly better for you to pay such expenses from an HSA than from cash, credit cards or checking accounts! For example, if you have $100.00 per month in such expenses it is smarter for you to contribute that to your HSA, (your payroll cost is most likely between $60.00 and $70.00). Now you can use your HSA’s $100.00 of value to reimburse these medical, dental and vision expenses using pretax dollars. If your employer should match your HSA contributions all the better, as this strategy becomes an even more important way to stretch your family’s dollars.
The number one rule about retirement plans in a down market, do not move monies from one account to another because you automatically lose value at the time of the transfer! Unless you know for certain that you can make up that deficit in a short period of time, you are better off to ride it out and wait to move from that fund or funds once it gets closer to its original value.
If you are able, a second job is pretty easy to come by because there are a lot of companies looking and that just might be the only silver lining of what is currently happening in this market.
Sure hope that one or more of these ideas helps you and your family through what certainly feels like a recession.
by Bill Kite 02/13/2022
