Financial Planning Corner: Planning for Uncertainty

Uncertainty has been a consistent theme during the first quarter of 2025. The current economic environment makes it extremely tough to plan for both the short and long term. Individuals and businesses need an idea of where things are headed to inform their decisions. Behaviors change when things are unclear, which can lead to a slowing economy and market volatility. However, there are a few things you can do to put yourself in the best position to weather the storm.

Cash on hand. In your working years, we recommend having an emergency fund of at least three months of expenses for a dual-income household and at least six months for a single-income household. For retirees, we recommend having six months to one year of expenses in cash. When something unexpected happens, having cash on the sidelines shields you from being forced to sell an investment during a short-term downturn or market correction (defined as a 10% decline). The average length of an S&P 500 correction is just over four months. With inflation expected to remain elevated, and thus interest rates likely staying higher for longer, a high-yield savings or money market account will still provide some return on your idle cash.

Analyze your short-, mid-, and long-term goals. Prioritize the items you need, want, or wish to occur in the next 12 months. See if you have the funds to cover these expense(s), can delay them if not, or if you require a withdrawal from your portfolio. If you know you will need a withdrawal in 2025, we recommend doing it now rather than trying to time the market. For mid- and long-term goals, start analyzing how you will cover these expenses and strategize savings or withdrawals now.

Check in on your Financial Plan. If you have created a plan within the last four or five years, then your SWWM portal should have the percent chance of success tiles on the landing page (screenshot below). These dials show the stress-tested results of your base plan and an alternate scenario with a prolonged long-term care need.

While we do not recommend looking at your portal all the time, we do recommend logging in every quarter to review your portfolio, most recent quarterly report, and percent chances of success. If you ever feel concerned, check back in, and see if there is any impact on your long-term financial success. If you still feel anxious, we are just a call or email away. We hope this perspective will give you peace of mind through times of uncertainty. If you feel your circumstances have changed, let us know and we can discuss updating your plan. If you do not have a Financial Plan and want to get started, please reach out and we can discuss the steps. 

This Commentary is provided by Spraker West Wealth Management, a registered investment advisor, and is for informational purposes only. It should not be construed as investment advice and is not intended as a solicitation of any specific product or service. Investments and/or investment strategies include risk including the possible loss of principal. There is no assurance that any investment strategy will achieve its objectives. Information provided is not intended as tax or legal advice and should not be relied upon as such. You are encouraged to seek tax or legal advice from a qualified professional.