In the last year, we’ve all seen prices creep up and up – the fact is, inflation rates are at 7% or higher now and it can impact your retirement plan.
Since inflation has been relatively low in the past (generally about 4% from the early 1990s until 2020), you might not know what to do – and you might be tempted to panic.
With the global pandemic, the war in Ukraine and other global factors, inflation is here to stay for a while. So, what can retirement plan participants and sponsors do to safeguard their assets?
It’s not all gloom and doom.
If you are a plan sponsor, now is the time to talk to your participants, being available to answer questions and encourage them to review their portfolios. Taking a look at how assets are allocated – and switch things around if necessary – can be a good strategy. Some assets will do better in an inflation situation – and some will do worse. So, encouraging investors to reallocate assets and maximize their portfolio is a great step. It’s also a good time for plan sponsors to evaluate target-date funds.
Also, plan sponsors should be working with plan advisors and recordkeepers, to educate plan participants. When you help your participants become more financially savvy, they can make better decisions – which can help them stay calm during times of inflation, economic hardships or stock market dives.
Do you still have questions about retirement planning options, or how your small business can participate?
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If you have other questions about retirement plan loans,email us or call 937.308.0758.
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