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In light of recent market swings discussed in the article, Nokia employees should keep a conservative portfolio,' said the report. Adapting your Retirement strategy to weather market volatilities can protect your future financial security without sacrificing growth as you approach Retirement, says Tyson Mavar of the Retirement Group.
Given recent steep dives in both stocks and bonds, Wesley Boudreaux of the Retirement Group says Nokia employees should do some serious financial planning. This mitigates risks and positions you to profit from market recoveries - a resilient investment strategy in the face of economic uncertainty. '
In this article, we will discuss:
1. Market Volatility and Retirement: How market fluctuations affect retirees' savings and why a diversified investment portfolio is important.
2. Historical Market Recovery: History of how stocks have rebounded from corrections and the value of historical data in predicting market trends.
3. Economic Fundamentals and Projections: The robustness of U.S. economy fundamentals and their ability to contain short-term market volatilities.
DON'T PANIC
Several studies suggest that extreme market volatility may be especially difficult for retirees or those approaching retirement age to recover from possible losses. According to a report in October 2021 from Fidelity Investments, market volatility could wipe out retirement savings of up to 26% for those in their 60s. That underscores the need for a diversified investment portfolio and a solid retirement plan that reflects possible market volatility.
Stocks are off to among the worst starts in history for both markets. The S&P 500 Index was down 12.92% and other broad market indices were down double digits through April 2022. (1)
And worse than that, investors like those in Texas or New York are losing nearly as much as they are on the equity side of their portfolios. The Bloomberg U.S. Aggregate Bond Index measures domestic fixed income and posted its sharpest quarterly loss since 1980 to start the year (2) and is down -9.50% through April end. The current environment has left investors with nowhere to run and some have left markets or gone to cash - so we feel it important to bring this up with our Nokia clients.
A hasty reaction could leave investors missing out on a rebound, since historical equity performance following market corrections and solid underlying economic fundamentals point to a stock market rebound sooner rather than later. Contact retirement-focused advisors today if you're unsure of your situation.
A BULL CASE FOR EQUITIES:
OUR GUIDE - HISTORY. The S&P 500 entered correction territory again 22 trading days after exiting; it makes its fastest return to negative 10% performance since November 2008, when the Great Financial Crisis began. (3) For our Nokia clients, the table below excludes periods where a correction turned into a bear market and shows how the S&P 500 fared after exiting a correction. In the S&P 500, the average gain after exiting a correction was nearly 14%, based on data going back to 1928. (4)
Not every bad start to the year is indicative of things to come, we remind our Nokia clients. It marks the third worst start to 2022 for the S&P 500 Index.
In spite of this, stocks recover nicely after the worst starts - on average - and rise 10%. Double digit gains are certainly possible in the last eight months of the year based on statistics for our Nokia clients. (5)
FOR MARKETS IT IS A BULL CASE: STRONG ECONOMIC FUNDAMENTALS Aside from historical performance that backed a second-half rally in equities, fundamentals for the U.S. economy remain solid. Demand resilience, robust corporate and consumer financial positioning, and rising earnings may provide shock absorbers during the near- to medium-term volatility that market observers expect to remain.
Initial expectations for first-quarter economic development showed a surprise contraction. US real GDP lost 1.4% (adjusted for inflation) from +6.9% in the previous quarter. This sharp slowdown was due to a drag from exports, a drop in inventory spending after a large uptick in the prior quarter and, less notably, in government spending. Moreover, consumer expenditure grew at a healthy pace - it makes up almost 70% of the U.S. economy. Personal consumption grew by 2.7% from 2.5% in the previous month, with increased expenditure on services. Over the previous decade, consumer spending grew an average of 2.3% per year. (1)
Business investment jumped by 9.2%, the highest level in a year - another positive economic indicator. If companies accelerate automation and investment to cope with persistent labor shortages, the broad momentum in capital expenditures should continue. Overall, the extremely constrained labor market and wage growth help consumers. We think consumption will continue to support above-average economic growth this year as the effects of the pandemic are easing - and remind our Nokia clients of this. One last caveat: economic growth can differ greatly from stock market growth - as the markets currently stand.
Trying to predict the market by selling existing positions and entering a supposed 'safer' environment usually results in a big loss for shareholders. Investors do best if they stick to a plan, weather market downturns with conservative, risk-adjusted asset allocations, and remain invested through the turnaround when the biggest gains materialize.
Economic Definitions GDP is the ultimate market value of all goods and services made in a nation. It is the most used economic indicator. GDP by expenditure method measures total final expenditures at purchasers' prices excluding exports minus imports. This assumes inflation.
Index Definitions S&P 500:
The S&P 500 (r) is the best single indicator of large-cap U.S. equities and the basis of an enormous range of investment products. It includes 500 major companies and represents about 80% of market capitalization.
The Bloomberg Barclays US Aggregate Bond Index measures the investment-grade US dollar-denominated, fixed-rate taxable bond market. It contains Treasuries, government-related and corporate securities, MBS (agency fixed-rate pass-throughs), ABS, and CMBS (agency and non-agency).
The investment is like gardening. As a gardener would plant, tend and prune his plants, so must an investor take care of his investments. You need patience, diligence & a long term vision. As a gardener might face drought, pests or extreme weather, investors face market volatility, inflation, and economic downturns. But with planning, diversification, and periodic adjustments both gardeners and investors can reap great rewards. Time and effort pays off in a satisfying harvest.
Articles you may find interesting:
- Corporate Employees: 8 Factors When Choosing a Mutual Fund
- Use of Escrow Accounts: Divorce
- Medicare Open Enrollment for Corporate Employees: Cost Changes in 2024!
- Stages of Retirement for Corporate Employees
- 7 Things to Consider Before Leaving Your Company
- How Are Workers Impacted by Inflation & Rising Interest Rates?
- Lump-Sum vs Annuity and Rising Interest Rates
- Internal Revenue Code Section 409A (Governing Nonqualified Deferred Compensation Plans)
- Corporate Employees: Do NOT Believe These 6 Retirement Myths!
- 401K, Social Security, Pension – How to Maximize Your Options
- Have You Looked at Your 401(k) Plan Recently?
- 11 Questions You Should Ask Yourself When Planning for Retirement
- Worst Month of Layoffs In Over a Year!
- Corporate Employees: 8 Factors When Choosing a Mutual Fund
- Use of Escrow Accounts: Divorce
- Medicare Open Enrollment for Corporate Employees: Cost Changes in 2024!
- Stages of Retirement for Corporate Employees
- 7 Things to Consider Before Leaving Your Company
- How Are Workers Impacted by Inflation & Rising Interest Rates?
- Lump-Sum vs Annuity and Rising Interest Rates
- Internal Revenue Code Section 409A (Governing Nonqualified Deferred Compensation Plans)
- Corporate Employees: Do NOT Believe These 6 Retirement Myths!
- 401K, Social Security, Pension – How to Maximize Your Options
- Have You Looked at Your 401(k) Plan Recently?
- 11 Questions You Should Ask Yourself When Planning for Retirement
- Worst Month of Layoffs In Over a Year!
Sources:
1. Fidelity Investments. 'Fidelity Wealth Management - Perspectives on Inflation.' Fidelity , 30 Apr. 2022, www.fidelity.com .
2. Fidelity Investments. 'Fidelity 2023 RSA Executive Summary.' The News Market , 2023, preview.thenewsmarket.com.
3. Lannan, Kelly. 'Fidelity® Q3 2021 Retirement Analysis: Retirement Savers ‘Stay the Course’ in Spite of Stock Market Swings and Ongoing Economic Uncertainty.' Business Wire , 2021, www.businesswire.com .
4. Fidelity Investments. 'Market Volatility Resources and Insights.' Fidelity Institutional , www.institutional.fidelity.com .
5. Fidelity Investments. 'Navigating the Current Environment.' Fidelity , www.fidelity.com .
What unique features and benefits does the Nokia Retirement Income Plan offer to its participants, and how can these benefits be maximized by current employees of Nokia of America Corporation? Additionally, what resources are available for employees to educate themselves about the various aspects of the plan, including eligibility, distribution options, and potential tax implications?
The Nokia Retirement Income Plan offers participants a defined benefit plan designed to provide financial security through retirement by supplementing Social Security and other retirement savings. Benefits can be maximized through strategies like ensuring accurate service records, understanding distribution options such as lump-sum payments or annuities, and consulting financial advisors to align these benefits with long-term retirement goals(Nokia of America Corpor…).
How does participation in the Nokia Retirement Income Plan facilitate financial security in retirement for employees, specifically in terms of pension benefit calculations and options such as lump-sum distributions or annuities? Moreover, what are some strategies that Nokia of America Corporation employees can employ to ensure they are fully prepared to utilize their retirement benefits as they transition towards retirement?
Participation in the Nokia Retirement Income Plan ensures financial security in retirement through pension benefit calculations based on service years and salary history. Employees can choose from options like lump-sum distributions or lifetime annuities. By carefully selecting a distribution option and incorporating it into a broader retirement strategy, employees can optimize financial outcomes(Nokia of America Corpor…).
With respect to changes in personal circumstances, such as marriage or divorce, what provisions does the Nokia Retirement Income Plan have to protect the benefits of employees from Nokia of America Corporation? How can employees navigate the complexities of Qualified Domestic Relations Orders (QDROs) within the context of their pension benefits, and what resources are available to assist them in this process?
The Nokia Retirement Income Plan protects benefits in cases of personal changes such as marriage or divorce through provisions like the Qualified Domestic Relations Order (QDRO). Employees can consult the Nokia Benefits Resource Center for assistance in navigating QDROs to ensure a fair division of benefits. Guidance is available for understanding the QDRO requirements and how they apply to their pension(Nokia of America Corpor…).
What steps must employees take to initiate the commencement of their benefits from the Nokia Retirement Income Plan once they reach retirement age? Furthermore, what are the important considerations employees need to keep in mind regarding the selection of a payment form and any potential impact this may have on their overall financial strategy during retirement?
To initiate pension benefits under the Nokia Retirement Income Plan, employees must submit a claim when they reach retirement age. They should consider factors such as payment form options (lump sum or annuity) and the impact on long-term financial plans. Choosing the appropriate payment form is critical to maximizing retirement income(Nokia of America Corpor…).
How can employees of Nokia of America Corporation ensure their beneficiaries are properly designated under the Nokia Retirement Income Plan, and what implications does this designation have for benefit distribution in the event of their death? Additionally, what steps should employees take to update their beneficiary designations in light of significant life events?
Employees can ensure their beneficiaries are properly designated by updating their beneficiary forms through the Nokia Benefits Resource Center. Proper designation affects how benefits are distributed in the event of their death, and it is crucial to update designations after life events like marriage, divorce, or the birth of a child(Nokia of America Corpor…).
In terms of compliance with federal regulations, how does the Nokia Retirement Income Plan adhere to ERISA guidelines concerning employee benefits, and what rights do employees of Nokia of America Corporation possess under these regulations? Also, how can employees exercise their rights effectively if they encounter issues regarding their pension benefits?
The Nokia Retirement Income Plan complies with the Employee Retirement Income Security Act (ERISA), giving employees the right to receive information about their benefits and hold fiduciaries accountable. If employees face issues with their pension, they can exercise their rights through claims and appeals, with recourse available through legal action if necessary(Nokia of America Corpor…).
How does the Nokia of America Corporation support employees who might be eligible for a disability pension under the Nokia Retirement Income Plan, and what specific eligibility criteria must be met? Additionally, what resources are available to assist employees in understanding this facet of their retirement benefits?
Employees eligible for a disability pension under the Nokia Retirement Income Plan must meet specific criteria, such as proving permanent disability before reaching retirement age. Resources like the Nokia Benefits Resource Center can provide guidance on the eligibility process and required documentation(Nokia of America Corpor…).
What specific actions should an employee of Nokia of America Corporation take when applying for a pension benefit under the Nokia Retirement Income Plan, and what documentation is typically required to streamline this process? Furthermore, in the event of a claim denial, what recourse do employees have to challenge the decision through the plan's appeal process?
When applying for pension benefits, employees should provide documentation such as proof of age and employment history. In case of a denial, they have the right to appeal through the Employee Benefits Committee. If necessary, employees can further appeal to federal courts under ERISA(Nokia of America Corpor…).
How does the pension benefit guarantee from the Pension Benefit Guaranty Corporation (PBGC) apply to employees of Nokia of America Corporation, and what are the limitations of this guarantee in protecting retirement benefits? Additionally, how can understanding these protections help employees make informed decisions regarding their retirement planning?
The Pension Benefit Guaranty Corporation (PBGC) guarantees benefits under the Nokia Retirement Income Plan in case the plan terminates. However, there are limitations, such as caps on benefit amounts. Understanding these protections helps employees make informed decisions about their retirement planning(Nokia of America Corpor…).
How can employees contact the Nokia Benefits Resource Center to gain more information about their benefits and the specific resources available under the Nokia Retirement Income Plan? What are the recommended communication channels and hours for reaching out to ensure timely and effective assistance?
Employees can contact the Nokia Benefits Resource Center through the Your Benefits Resources (YBR) website or by calling the designated phone line. It is recommended to use these channels during business hours (9:00 a.m. to 5:00 p.m. ET) for timely assistance with pension-related questions(Nokia of America Corpor…).
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