Omnia Family Wealth in GoBankingRates: How a “Richcession” Can Affect Your Wallet
As the odds that a recession will hit the U.S. begin to subside, some experts are noticing that one segment of the population is already experiencing the effects of a downturn: wealthy families. Known as a “richcession,” these impacts will likely persist even as overall recession fears continue to fade. To help affluent investors better understand how this richcession may affect their finances, GoBankingRates spoke with Michael Wagner, co-founder and chief operating officer at Omnia Family Wealth.
“A richcession affects people with significant wealth invested in the market,” says Wagner. “So right now, they’re feeling the effects of inflation and still dealing with the fallout of a rocky year in the stock market last year despite this year’s recovery.”
According to Wagner, if you fall into that group and are approaching retirement, the richcession might significantly impact your spending habits, as your investments and savings must now focus solely on saving for retirement. However, for younger investors, the effect will be more psychological and short-term since they have a longer runway in their careers and time for savings to accumulate, he explains.
“How much you’re impacted depends on your time horizon and when you have plans to tap into the money you may have invested in the stock market,” Wagner tells the publication. However, he also believes that the richcession is poised to have a ripple effect on the rest of the economy, and hence the wealth of all investors.
“Think of where a lot of money is typically spent in travel and dining. If those people are spending less money traveling and dining out, that means there’s less money going into the hands of people working at restaurants and various tourist destinations who are then unable to spend in their local economies,” says Wagner. “The wealth effect impacts people all over, and tourist areas like South Florida are often impacted because tourism gets cut first.”