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Friday, Mar 29, 2024

Recessionary Fiscal Readjustment Not Necessarily a Bad Thing

By MARY L. KOTZMAN People today are experiencing so many emotions in response to the recession it can be a bit overwhelming. And while much of the news seems to focus on the very bad, if you watch the pundits on TV or listen to talk radio, there are some silver linings. A recent press release said survey* respondents indicate new, lower levels of spending are structural and could last for nearly a decade after the recession ends. Seventy-seven percent of those surveyed said that even post recession they plan to wait for sales; 66 percent said they plan to buy less in general; and 58 percent said they plan to buy less-expensive things. Spending time with one’s family and friends seems to have become a renewed priority, all with good ramifications. Volunteerism has risen rapidly. On the savings front, the survey revealed that once the recession ends, Americans plan to save 14 percent of their total earnings, with the replenishment of their 401(k) and other retirement savings their biggest long-term concerns. Survey participants estimated that their retirement savings have dropped an average of 25 percent, and almost a quarter of those polled (22 percent) said they now plan to retire later than previously expected. So what do you do to adjust your daily habits to your financial goals? Reduce your spending? Stop contributing to your retirement plans or investments? Allow fear to rule your common sense and not do what you need to? Honestly, now is the perfect time to sit down and review where you are financially. Here are a few questions that you may want to consider. – Have you set a real retirement goal? When? How much per month do you need to live on? Where is the money coming from? How will those dollars be taxed? – Have you reviewed your investments to ensure they are still in line with your risk tolerance and long term goals? – Have you reviewed your insurance needs for you and your family? – Do you have an emergency fund available? *The AlixPartners Long-Range Economic Outlook survey was conducted February 19 to March 3, 2009, with 5,031 people in the U.S. across ten key demographics. Mary L. Kotzman is an Accredited Investment Fiduciary Analyst & #381; and VP-Financial Planning at L/B/W Insurance and Financial Services in Santa Clarita

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