The past five years have ushered in AI, inflation, changing interest rates, evolving tax and regulatory environments, a dynamic international market, and accelerated market changes here in the U.S. 

This sometimes startling rate of change has meant that investors have experienced periods market volatility, advances in artificial intelligence, and evolving tax and regulatory environments. In short, what was true five years ago may not be true today.

While no one can predict what the next five years will bring, these developments may mean it’s time to review your financial and retirement plans to ensure they accommodate recent economic shifts and continue to reflect your goals, time horizon, risk tolerance, and financial circumstances.

Inflation May Affect Long-Term Purchasing Power

Inflation is an important consideration in retirement planning because it can reduce purchasing power over time. Although the rate of inflation has declined from its 2022 peak, the cost of many everyday goods and services remains significantly higher than it was just a few years ago. According to a recent article in Urban.org, the costs of food, housing, utilities, gasoline, and health insurance are all increasing faster than earnings.

That's why it makes sense to evaluate whether your projected retirement income and expenses continue to keep pace with current expectations and long-term objectives.

Higher Interest Rates Have Changed the Financial Environment

Interest rates have also risen significantly in recent years, affecting everything from borrowing costs to the yields available on certain fixed-income investments and savings vehicles.

In fact, interest rates influence the value and behavior of nearly every major asset class, not just bonds. Borrowing costs increase. Fixed-income investments may offer different yields.

These changes do not necessarily require modifications to an investment strategy. However, they may necessitate a review to check whether your portfolio is still structured to meet your retirement objectives, risk tolerance, and income needs.

Technology Continues to Shape Financial Markets

Artificial intelligence is changing the nature of business. It's affecting industries and creating new opportunities and risks for businesses and investors alike. That's why it's smart to consider how the economic landscape is shifting, and what that may mean for long-term investment trends.

For example, as AI applications become more widespread, companies are investing heavily in the computing power and infrastructure needed to support them. That increased demand has affected not only technology companies, but also businesses involved in electrical equipment, power generation, cooling systems, semiconductors, and commercial real estate. And that means the investment market is also transforming.

Market Volatility Remains a Normal Part of Investing

Financial markets have experienced periods of both strong performance and meaningful declines in recent years. While market volatility can be unsettling, it has historically been a normal part of long-term investing.

Rather than reacting to each short-term market movement, many investors benefit from periodically reviewing their financial plans to determine whether they remain aligned with their long-term objectives.

Regular Reviews Can Help Keep Your Plan Current

Many of the most effective financial plans evolve as your life changes. Shifts in employment, retirement goals, family circumstances, income needs, tax laws, or the broader economic environment may warrant a review of your overall financial strategy. Even if no modifications are ultimately made, reviewing your plan periodically can help confirm that it continues to reflect your current circumstances and long-term goals.

Is It Time for a Financial Checkup?

At Mirus Financial Partners, we work with clients to review their financial plans, discuss changes in their personal circumstances and the broader economic environment, and help them determine whether their existing strategy continues to support their long-term objectives.

Every investor’s situation is unique. Decisions regarding retirement planning and investments should be based on individual goals, financial circumstances, time horizon, and risk tolerance. Contact Mirus Financial Partners to learn more. 

This article is provided for informational purposes only and should not be construed as investment, tax, or legal advice, or as a recommendation to buy or sell any security. Investing involves risk, including the possible loss of principal. Past performance does not guarantee future results. Consult your financial, tax, and legal professionals regarding your individual situation before making financial decisions.