With economic inflation and rumors of a potential recession dominating the news cycle, employees may worry about the impact fluctuations in national and global economies could have on their retirement savings. Earlier this month, TIAA, the administrator of the University’s pension plan, offered a webinar on market volatility to plan participants, convening a panel of experts to discuss strategies for navigating the turmoil. market and stay on track to achieve retirement goals.
Brian Nick, CAIA, chief investment strategist at Nuveen, was joined by Dan Keady, CFP (chief financial planning strategist) of TIAA; John Canally, CFA (Chief Portfolio Strategist); and host Shelly Eweka, CFP, to share insights on what’s driving market volatility right now, how to deal with market fluctuations, and how smart planning can help plan members stay on track with their retirement plan. , regardless of the market environment.
Here are four takeaways from the webinar:
1. There is hope for a soft landing. While summarizing the near-term market outlook, Nick pointed out that the U.S. economy could be heading for a “soft landing”, which means action by the Federal Reserve and other central banks could slowly slow down. global growth and curbing inflation, while strong private sector balance sheets can help prevent a slide into a minor or major recession.
“We think there is still a narrow path out of this without even a mild recession. I think a severe recession is even less likely,” Nick said. If there is a minor recession, Nick says that most investors should be able to weather the storm, noting: “The difference for most investors between a soft landing where we don’t have a recession, but things are slowing down, and a mild recession, don’t probably won’t be too big.
2. We’ve been here before. Nick pointed out that current market concerns are relatively short-term in nature, and history has taught us that market valuations generally increase over time. He points to the financial crisis of 2007-08 and the data of the decade since, during which the S&P 500 rose about 15% per year during the 2010s and investors saw a remarkable rate of return.
“If you have just retired or are planning to retire, you are probably working a longer period than the next two months. [to see notable returns]”, Nick said. “And that’s a good thing because we think things have improved from a valuation perspective and over long periods of time valuation is for market returns.”
Nick explained, “If you’re buying at very high levels today, your returns over the next five or ten years probably won’t be as good. The flip side is that if you entered right after the financial crisis of 2009 or even 2010, your next 10 years, as we now know, were extremely profitable. … We can be a bit more optimistic about forward-looking returns over the rest of this decade for the equity markets, fixed income markets and hybrid markets like credit in which we invest. I think we’re going to see a broad- an appreciation based on asset values that takes us beyond what this tough time will end up being – whether it’s a soft landing or a recession. , and towards further expansion and a new bull market. So that leaves us a bit more optimistic.
3. Stay on track with your investment strategy. Canally shared that while it can be emotionally difficult to do the right thing – stay the course – with the current market volatility, investors should avoid making hasty emotional decisions with their investments during uncertain times to avoid long-term negative consequences.
According to Canally, “An important question to ask is: ‘Am I making a decision based on material changes in my life? Or do I make these decisions based on prevailing trends in the investment markets? »
He cited the importance of sticking to a well-planned, long-term investment strategy, including recommendations for investors to:
- Have a solid financial plan and review/adjust it based on life changes;
- Diversify investments based on your risk tolerance;
- Rebalance investment assets to stay well positioned and in line with your risk appetite despite market fluctuations;
- Take advantage of market downturns to manage your investment-related taxes; and
- Stick to your investment strategy and don’t try to time the market.
4. Take advantage of TIAA resources, available to plan members at no additional cost. To help navigate all of these strategic recommendations, Keady highlighted some of the resources available to TIAA plan members. One of the most valuable offerings for Syracuse University employees is the ability to schedule a one-on-one meeting with a dedicated TIAA Financial Consultant to receive personalized guidance and training. An advisor can help investors rebalance and diversify their portfolio based on their risk appetite, as mentioned above. By visiting tiaa.org/tools, plan members have access to retirement calculators, an asset allocation evaluator, and debt/budgeting workshops, all of which can help them achieve their retirement goals. retirement savings in any market environment.
Eligible employees can learn more about the Syracuse University pension plan on the Human Resources website or by visiting TIAA.org/syr. A recording of the full “Market Volatility” webinar is also available.
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