Retirement Investing Challenges- the Road Ahead ?

From the assassination attempt on former President Trump, President Biden’s announcement that he will not be seeking re-election, two major ongoing wars, elevated interest rates, and a deft rotation out of tech stocks leading to heightened market volatility, recent events have added to investor concerns, especially for those in or nearing retirement.

It’s natural for investors to be concerned about where the market is headed, especially as the presidential election season heats up and the Fed prepares for its first rate cut this cycle. However, history shows that it’s important for investors to stay focused on the long run and not overreact to every news headline. It is also important to avoid getting sucked into fearmongering non -traditional investments being pitched by unscrupulous advisors online and at steak dinners. Just remember the motto there is no such thing as a free lunch.

Jon here. Investing for retirement and getting rich over time should not be a gamble like the state lottery, Vegas or horse betting, yet many successful individuals and families that worked hard for years and decades still get thrown off course by get rich schemes. Attaining wealth can be achievable, but maintaining financial security and a lasting legacy takes discipline, work, time and education. As an accredited CFP? pro, I have found that helping clients get their “financial house” in order while creating and executing a realistic retirement roadmap, is as critical for long term financial success as our fiduciary, fee-based investment strategies through our Charles Schwab and Fidelity custodian partners. This all fits into our Plan your best life? maxim while providing concierge-level service.

Death, Taxes and Inflation?

To paraphrase Benjamin Franklin, nothing is certain except death, taxes and inflation. The past few years of post-pandemic record high inflation combined with robust stock market gains, was a powerful reminder for retirement investors of all ages to stay the course with their portfolio to help keep up with inflation over time and not be sitting on the sidelines with the lion’s share of their 401(K) and savings in cash due to fear or uncertainty. Many advisors and investors we speak to seem to forget to include inflation adjustments into their retirement assumptions and income projections.

Looking back in time, the sizzling 14.9% CPI high of the early 80’s when then President Regan took office may not return to haunt us anytime soon but may still be providing retired investors with PTSD memories of more challenging times from the past. Looking forward, if CPI moderates over time to just near the 3.2% historical average, your cost of living will increase by 50% over the next decade and double over the next 20 years. This means that whatever your annualized budget may be if you retire by age 65, you may need 50% more income to meet your goals by age 75 and double that amount by age 85, if you are blessed with longevity.

Much has changed over the past five decades for retirement investing individuals, especially with medicine and longevity. With many people now experiencing more than a two- or three-decade retirement, staying composed and calm is the best way to help achieve long-term financial goals. Between 1970 and 2023, life expectancy at birth increased from just over 77 years to nearly 85 years for women and from just over 72 years to nearly 82 years for men. This was an increase by almost 8 years for women and 9 years for men.

Three-Legged Stool No Longer Applies?

Gone are the days of working for the same company for decades and retiring at age 65 to then receive a gold watch and an employer pension. The tradition of giving gold watches originated back to the 1940s with The Pepsi Co. The concept of "you gave us your time, now we are giving you ours," made sense when people stayed with a company for years and the price of gold was about $34 an ounce. Today, the average length of job tenure is roughly five years and the price of gold hovers near $2,390 an ounce.

click to read more on our weekly outlook and charts- as well as past blogs. https://ulinwealth.com/retirement-investing-challenges/