Future-Proofing Your Retirement: Tackling Economic Volatility in 2024

If you listen to the “talking heads” in the media these days, you’ll hear about the potential for a recession in 2024, continued inflation, higher-than-normal interest rates, and, if that isn’t enough, the impact of a presidential election year. It all adds up to an unpredictable market and some volatile conditions. So, what does this mean for your investments and retirement plans, and what can you do to prepare for these market conditions?  

Doing nothing may not be an option. It pays to be prepared with a flexible, responsive investment strategy. Your goal should be to have an adaptable financial planning strategy in place. How does this fortify your retirement investments against these unpredictable headwinds?

You’ve probably heard the term ‘recession-proof your retirement,’ but what does that mean, and how effective is it? And more to the point, how do you implement a plan that adapts to an ever-changing economic environment without falling victim to short-term market movements? 

At Heritage Capital, we don’t believe in putting Band-Aids on your portfolio when markets are turbulent. We believe in creating financial plans and portfolios that focus on pursuing long-term goals but can hold their ground against all of the market turbulence that could come our way in 2024.

Adaptive Financial Planning: The Foundation for Long-Term Financial Independence

Financial planning should be the bedrock for long-term financial independence, especially in an environment rife with unpredictable market fluctuations. Instead of being reactionary—a response that often leads to emotional decision-making after the fact and lower returns—adaptive financial planning enables you to anticipate market volatility and plan for it. 

This proactive approach involves identifying your financial goals, assessing your risk tolerance, determining your timelines, and updating your diversified portfolio of investments regularly.  This is not a “set-it-and-forget-it” strategy. This is staying flexible and responsive so you can make timely adjustments to your investment portfolios, allocate assets more efficiently, and be better prepared for what the economy, government, and Wall Street throw at us.

Watch Paul’s Video: Recession Ahead? Be Careful of Any Assumptions You May Have.

Adaptive Financial Planning in Action: A Case Study

Meet Sarah and Bob, who employed adaptive financial planning to safeguard their retirement savings during a challenging economic downturn.

I met Sarah and Bob in 2007. They had been diligently saving for retirement for many years. When the stock market took a deep dive in 2008 and early 2009, they were very concerned about how they could preserve their hard-earned assets in their retirement accounts. Based on their willingness to be proactive, they decided to take a hands-on approach to their financial planning rather than relying solely on what has worked in the past.

We started by analyzing their current investments, inside and outside their 401k. They recognized the need to diversify their assets beyond the stock market and avoid any potential duplications. With my assistance, they explored alternative investments, including bonds, real estate, and commodities, to reduce their exposure to one volatile asset class.

Sarah and Bob also decided to optimize their retirement contributions to the best of their ability – even if it meant making a few short-term sacrifices. They also committed to paying down as much expensive debt as possible, starting with their credit cards. The first move boosted their retirement savings, thereby reducing their taxable income, and the second move will free up future income to save even more.

They also made additional strategic adjustments to their current spending habits. They trimmed some unnecessary expenses and established a six-month emergency fund to cover unexpected expenses so emergencies or unexpected events would not impact their retirement savings. 

Additionally, they did an excellent job of keeping themselves informed about economic trends and market developments. We met regularly to fine-tune their strategy and adapt their financial and investment strategies to address changing market conditions.

When the recession intensified, Sarah and Bob didn’t panic. Their disciplined approach paid off, as their investments weathered the storm better than most.

Selecting the Right Financial Advisor to Manage Your Financial Future

One of the most important decisions you can make for yourself and your family is who you select to help plan your financial future and manage your assets. This is particularly true as you approach your retirement years and have more to lose and less time to recover. As someone who has amassed a significant amount of assets, we highly recommend hiring a fee-only fiduciary financial advisor.  

Here are five reasons why:

• Fee-only fiduciary advisors provide impartial guidance because they are not paid by third parties to sell you financial products. Their recommendations are solely based on what is in your best interests.

• With a fee-only structure, you know exactly what you’re paying for advisory services. There should be no hidden charges or conflicting incentives from third parties, ensuring clarity in your financial partnership.

• Fee-only fiduciary financial planners should work closely with you to develop customized financial plans that align with your goals, circumstances, and tolerance or capacity for taking risks. The advisor’s focus should always be on the pursuit of your goals.

• Fee-only fiduciary advisors should select investments without potential conflicts of interest or biases. The investments they recommend should be based solely on objective recommendations based on your long-term needs.

• Your advisor’s fiduciary duty extends far beyond the initial financial planning process. The advisor is responsible for continuously monitoring and adjusting your financial strategy so you are always aligned with what is happening now.

• Financial advisors with the Accredited Investment Fiduciary® (AIF®) designation have specialized training and knowledge in meeting their fiduciary responsibilities. They are prepared to always act in your best interest, using sophisticated risk management strategies to safeguard your wealth.

From Wall Street to Main Street

Paul Schatz, the founder of Heritage Capital LLC, started his career on Wall Street, where he honed his investment management skills serving high-net-worth individuals, hedge funds, and large institutions. 

But Paul had a broader mission: why not extend these advanced financial strategies to Main Street investors seeking financial security and independence? 

That vision spurred the creation of Heritage Capital. Leaving the plush confines of Wall Street, Paul embraced entrepreneurship and established an independent firm positioned always to do what was best for his clients.

This independence meant he could consistently provide truly unbiased advice, free from any pressure that the “corporate” office applies. And, operating on a fee-only basis, his firm could align its interests squarely with its clients.

At the core of it all is Paul’s commitment to making a meaningful impact on his client’s financial well-being. For him and his team at Heritage Capital, there’s no greater fulfillment than making a tangible difference in how his clients live their lives.