How the current economy could affect your retirement plans

(KSLA) - Are we in a recession? Financial experts are split.

According to the definition of a recession, the United States is in one. However, the National Bureau of Economic Research takes more factors into account.

Regardless, the current economy largely impacts people who are at retirement age.

“A recession means that financial markets often crumble, forcing people to delay retirement — or return to work — in reaction to their shrinking nest eggs,” according to AARP.

The Dow Jones Industrial Average, the S&P 500 and the Nasdaq each lost more than 1.5% Friday, Sept. 23, with the Dow closing at its lowest level since late 2020. On Monday, Sept. 25, the Dow was down 1.11%, the S&P 500 was down 1.03% and the Nasdaq composite index declined 0.6%. The S&P is down 23% since its peak in January.

Ben James, co-founder of Deupree James Wealth Management Group, said his company has advised its clients that the economy is likely headed toward a recession. “It’s one of the worst setups I’ve seen in my career.”

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A recession generally is defined as “two consecutive quarters of negative economic growth,” which was shown by the Bureau of Economic Analysis’ revised second-quarter number.

“Real gross domestic product (GDP) decreased at an annual rate of 0.6% in the second quarter of 2022, following a decrease of 1.6% in the first quarter,” the report reads.

NBER defines a recession as a “significant decline in economic activity spread across the economy and that lasts more than a few months.”

AARP recommends you save, pay down debt, keep money on hand and ease your way back into the stock markets.

The White House pointed to the Inflation Reduction Act, falling gas prices and low unemployment when discussing the economy Friday.

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