A 12 year-long bull market run recently came to a close, and many Americans have experienced the effects. For those nearing or in retirement, this can be especially worrisome. If you’re wondering what your course of action should be right now, you should consider your risk tolerance, where the market is heading, and how you can minimize your taxes. These are three questions a financial advisor can help you answer.

What Is My Risk Tolerance?

If you don’t want to put off retirement or downgrade your retirement lifestyle, you may want to reassess your risk tolerance. Risk tolerance can change with age. If you haven’t changed your investment approach in a decade, it can help to talk with an advisor who can help you quantitatively and qualitatively assess your risk tolerance. You might consider how you will cover your basic living expenses and your desired retirement lifestyle. From there, an advisor can help you decide on an appropriate investment strategy designed for your unique financial situation.

Where are the Markets and Economy Headed?

The first quarter of 2020 was a rollercoaster, with record single-day drops and gains. It was the Dow’s worst first quarter in history, and oil had its worst quarterly performance ever. Some say we’ve hit bottom on the market and it’s time for a recovery, while others say there are further drops to come. While no one has a crystal ball, an advisor can give you a sense of how past recoveries have played out, and where certain sectors of the market could be headed based on their research and analysis.

How Can I Minimize My Taxes?

There could be several ways a financial advisor can help you with tax strategies. Every part of a financial plan is connected, including an investment strategy and a tax minimization strategy. If you’ve sold off losing investments this year, you might be able to deduct those losses from your taxes if you itemize. Or, if your 401(k), IRA, or other retirement account balance has gone down, you might consider a Roth conversion. In this case, you would pay tax on the amount converted now, and then enjoy tax-free withdrawals later in retirement. If you take Required Minimum Distributions from your retirement accounts, note that Congress has suspended RMDs for 2020 in an effort to help those whose accounts took a hit recently.

One of the advantages of going to one professional for all of your financial planning needs is that everything from investment strategies to tax minimization works together in one overall plan. We can create a retirement plan that helps to mitigate risk in a down market. If you need to update or create a plan, reach out to us to schedule a complimentary financial review.


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