Protecting Your Retirement from Inflation

12.6.24: Audio automatically transcribed by Sonix

12.6.24: this mp3 audio file was automatically transcribed by Sonix with the best speech-to-text algorithms. This transcript may contain errors.

Speaker1:
Any examples used are for illustrative purposes only, and do not take into account your particular investment objectives, financial situation or needs and may not be suitable for all investors. It is not intended to predict the performance of any specific investment, and is not a solicitation or recommendation of any investment strategy.

Speaker2:
Welcome to Money Matters with Mike, with your host, Mike Zeno. Get set for a full hour of financial information and economic news affecting your bottom line. Mike works hard each day to educate Americans like you on how to reach the financial freedom they've worked so hard for, and he can help you too. So now let's start the show. Here's Mike Zeno.

Speaker3:
What's up people? Welcome to the show. I'm Mike Zeno, coming to you from Fort Mill, South Carolina. Happy Saturday. On today's show, we are going to show you the real impact of inflation on your retirement and discuss how you can protect your buying power and worry less about spending. As always, I have the distinct honor and privilege of being joined by the one and only my co-host and producer extraordinaire, Mr. Matt McClure. Matthew, how are you today, sir?

Speaker4:
I am doing great, Mike. A little chilly here recently, but it's like. It's almost like we just about skipped fall and just went right into winter. Uh, lately. But but I'm doing well. I hope you are too. And staying warm.

Speaker3:
I am doing extremely well. Um, I cannot complain. There are many people who are way worse off than I because I have heat on these cold nights. Okay, one of the things that I just wanted to kick off the show with, I. I was introduced earlier this week to a gentleman named Kelly Tidwell, and he's doing some incredible things up in the North Carolina mountains. And I know a lot of people have said and have heard that the mountains are fine, that everything's back to normal, because that's what a lot of the media is actually saying. But that could not be farther from the truth. Okay. The aftermath of Hurricane Helene continues to impact those North Carolina mountains, where many of those residents are still living in temporary shelters, like tents or sheds or small campers as they rebuild their communities. Um, and with the arrival of this cold weather, staying warm has been become a critical challenge for these folks. Okay, we're down here in the Piedmont area, in the Charlotte area, and it's a lot warmer than it is up in those North Carolina mountains. And so families are having to use propane just to heat themselves, but they're running out way faster than they can actually refill their tanks. So I met this great human named Kelly Tidwell, who established a nonprofit that is called the Propane and Power Relief Fund, and he is working extremely hard to supply propane to these folks all winter long. But obviously his efforts alone are limited by the number of available tanks as well as the fuel to fill them up. So I am personally getting involved, but there's only so much I can do.

Speaker3:
So we as a team need your help. Okay folks, if you enjoy, you know, warm heat at night, um, you would want to hopefully have your neighbors up in the mountains experience that as well. So we are seeking donations of both propane tanks as well as funds to help those in needs. And there are two ways that you can contribute. Okay. The first one is obviously to donate propane tanks. If you have any old or maybe unused propane tanks sitting around, please consider just simply donating them. They are accepting tanks of any size and whether they are full or half empty or half full, whichever you choose, half empty or half full. However you choose to look at the glass or completely tapped out. Even tanks that are out of date, we don't even want you to fill them up. Kelly will recertify them before refilling them. Just the only thing he cannot accept for obvious reasons are damaged tanks or tanks that have any rust on them. And so some of our local friends are actually going to take these tanks to Kelly up in the mountains for refilling and for distribution. And then your donation will help make sure that these tanks get to those who need them the most. Okay, that's the first way. The second way that you can help donate is to actually give money to help donate for funds for propane. Okay. If you live outside of the immediate Charlotte area where you don't have any extra tanks to donate. You can still help by contributing to the fund that is going to be used to purchase the propane for the tanks.

Speaker3:
Okay, here's the good thing about donations they are tax deductible. And so that's a great way to make a difference, as well as take advantage of some year end tax deductions. And so if you want to donate online you can go on the web. Uh propane power relief.com. That's propane power relief.com. And for those of you who maybe prefer to use Zelle or Venmo, we actually have QR codes to send you. So all you have to do is simply reach out to us for those. And then if you want to mail a check, you can send them to the power and Propane. Excuse me, the Propane and Power Relief fund and the address is 1420 Pleasant Vale Valley Road, and that's in Delaplane spelled d e l a p l a n e. Virginia. 20144 and the great thing about Kelly is that he only accepts handshakes and hugs from the hurricane impacted families that he's delivering to. So they've been through so much, he doesn't accept any payment of any kind whatsoever from them. So if you have any questions about this effort or would like to donate tanks, please either leave a comment on the Money Matters with my contact page or message me at the Money Matters with my Facebook page, or just text me (704) 560-1573. I will respond as quickly as possible. Tell Kelly and his team's work is making a very meaningful impact in the affected mountain areas, and you can be a part of that too this holiday season. So thank you in advance for your kindness and support. Matt. Yeah.

Speaker4:
No, that that's fantastic. Mike. I think that it is. You know, we talk about obviously important things here on the show all the time, the way that people can use their money to, you know, help it work for them and put it to work for them so that they can accumulate it and then have income to live on in their retirement years. They can build wealth, all of those things. And that's so much a focus of the show. Um, but this is another thing that folks can do with their money or with those old propane tanks, like you said, that as long as they're not damaged or rusted, even if they are completely empty, um, they can, you know, take those and give those. But it's, you know, to folks who have suffered so, so much. Like you say, a lot of my family comes from the western North Carolina area. And as a matter of fact, I did my my DNA results, uh, a few years ago. And it's like, yep, they can they can trace my family back to the settlers of western North Carolina. So I have deep ties in that area. And so it's so important to to do this. And I thank you for bringing that to folks attention.

Speaker3:
It is I mean, we just got finished with Thanksgiving. We have a lot to be thankful for. The people who have survived in North Carolina have a lot to be thankful for. But we're also coming into the holiday season with, you know, joy and cheer. And there's a lot that we can do to aid in the ability for these folks who have been affected by just simply don't. I don't care if it's $5, $10, $1,000, whatever you can do. We would love to have your support in that. Again, I know I'm going to be personally involved, and I'm singing it from the mountaintops right now to try to get as many as my business owner friends involved, as well as the regular communities in our listening area. So again, appreciate each and every single one of you for even thinking about it. But all you got to do is take some action to really help these folks out in the mountains. That's right.

Speaker4:
And for more information, of course, you can text Micah at 704 704 5601573. You can also go online. Money matters with Mic.com is the website, and there you can fill out the contact form and ask Mike a question that'll go directly to his inbox. And you can, you know, reach out with any information that you might need to help make a donation to this worthy, worthy cause. This time of year, well, of course, a lot of ground to cover still here on the show. Mike, we're going to talk a lot about inflation, about the impact of it on people's retirement. It can be devastating to, you know, you think you have a plan in place, but then all of a sudden inflation rears its ugly head. The plans go out the door. You've got to have a plan that specifically takes inflation into account. And we're going to highlight that as we go throughout the show here today. Um, first let's let's get some some inspiration, let's say, for our conversations this week with our quote of the week.

Speaker5:
And now for some financial Wisdom. It's time for the quote of the week.

Speaker4:
This week's quote comes from the one and only Oracle of Omaha himself, Mr. Warren Buffett, who said this. The arithmetic makes it plain that inflation is a far more devastating tax than anything that has been enacted by our legislatures. The inflation tax has a fantastic ability to simply consume capital. Boy, that's powerful words there from Warren Buffett. If anybody knows about money, certainly it is him. And you know it just inflation really does consumes your capital. It eats away at the money that you have.

Speaker2:
Hungry for something to chew on. Here's some meat on the bone.

Speaker3:
Yeah. The purchasing power. Right. How far your money goes. Just think back to five years ago. Ten years ago, 20 years ago. How far $100 bill would actually go. And I remember not too recently, a couple of years ago, my wife sent me. I think she had eight things on a grocery store list that she asked me to pick up, and I had a $100 bill. That's all I had. And when I went in there to purchase these eight things, it was 100 and like 12 or $118. It was way more than what I expected it to be. And I'm like, Holy cow, how do ordinary Americans, you know, live on this stuff? And more importantly, how to retirees who are on fixed incomes live with the inflation that was going absolutely rampant just a couple of years ago, things have been, uh, tampered down a little bit. The rate of inflation has slowed down, but people are still suffering and not necessarily feeling it. Uh, the slowdown that is in their wallets or purses or, you know, bank accounts.

Speaker4:
That's right. And, you know, I mean, when you hear the news reports and everything about, oh, inflation is down, inflation is down, that I mean, that is true. The numbers bear that out. The rate of inflation is down. But that doesn't mean that we're paying less. That just means that we're paying more at a bit, you know, lower of a of a rate of increase than we were before, you know. So the prices are still going up, right.

Speaker3:
So prices are going up just not as fast as they were going up before. So we're still paying it.

Speaker4:
Exactly. That's absolutely right. And you know, there was this, um, report from Morningstar that actually highlights a lot of the ways that inflation hurts, specifically older Americans and retirees. And, you know, it really does impact everyone, but retirees can be more severely affected. And that is why, as I said a few minutes ago, you need a real plan to deal with inflation, right, Mike?

Speaker3:
That is true, Matt, because we all feel inflation whenever we go to the grocery store or you get gas in your in your vehicles, but we may not understand what it is or how it actually affects us. And the Department of Labor defines inflation as, quote, the overall general upward price movement of goods and services in an economy. Unquote. Right. Older households are generally harmed more by inflation as rising budget pressures reduce the ability for new savings. And they increase withdrawals from existing retirement accounts. But, you know, retirees themselves face the greatest risk because, as I just stated, their income aside from Social Security, is less indexed to prices. And the relative value of their retirement savings falls when compared to rising costs for everyday goods and services. Matt. Yeah, it.

Speaker4:
Can be really, really difficult for folks who are on that, you know, kind of fixed income or have only, you know, just got a pot of money that's only so big. And the more that you're withdrawing from it, and the more expensive things are getting, the more you have to withdraw from it, right? You just have less money. You have less buffer there to, to sort of play with. And you feel a lot less kind of stable about your retirement that, you know, little worry becomes big worry. Before too long. And, you know, there are a lot of different impacts of inflation on retirement. Of course, we've talked about the cost of living here, requiring that increase in retirement spending or withdrawals, what are maybe a couple of other ways that that inflation has affected seniors these past couple of years and will affect people going forward in retirement, should it get to where it was, again, over 9%, you know.

Speaker3:
Yeah. Well, I think, Matt, I just gave a perfect example. Right. The reduced power purchasing power of the retiree savings. I mean, if you could go into a grocery store with $100 and get everything you needed for the week and then some, well, that's a great day. Okay. But unfortunately, though, those days are, you know, decades gone now, apparently because it's been about that long since I've been to the grocery store. My wife handles all of that normally. Um, but it's also forcing those folks who are near retiring, right, to maybe postpone their retirement in order to increase the amount of savings they have available to them. Once they eventually do pull the trigger and retire. So, you know, those are two, I think, pretty big ways that it's impacting, um, that pre-retiree and retiree segment of the market. Yeah.

Speaker4:
Big, big ways that that's being affected there. And there were actually a few surveys here. I kind of want to run through some stats about inflation with seniors, you know, telling, uh, you know, these researchers exactly how they feel about inflation and its impacts. In a Greenwald research survey, 66% of people worry that they'll run out of money in retirement. That's up 6% from the year before from 2023. And you know that. Survey after survey has shown that it's the biggest fear of retirees even more than death itself, right? I mean, that's a huge fear. And it's only getting more and more because of the rate of inflation that we've seen.

Speaker3:
100%. I mean, statistics don't lie typically, right? I mean, when people are fearful of something because of the fact that they're experiencing less purchasing power. Um, that's a problem. I thought what I found also interesting from Prudential Financial was that 33% of 55 year olds and 43% of 65 year olds have postponed retirement due to inflation and higher living costs. These folks are realizing the impact that it's having on their money. And they're like, there's no way that I can actually afford to retire, given the current climate and the cost of goods and services. I mean, that's just that's that's eye opening.

Speaker4:
It really, really is. And, you know, very scary for folks who fall into those groups there. 35% of retirees also say they've withdrawn from savings or investments in the past 12 months in response to inflation. That one from the Society of Actuaries Research Institute. So that's just more than a third of people taking money out of their savings or investments because of inflation. So that money is no longer in their growing working on their behalf. And, you know, it's just kind of they're hit with that double whammy. As Warren Buffett was saying in that quote earlier, it really eats away at your capital. That's exactly what he was talking about.

Speaker3:
Yeah. And I think, I think the vast, uh, number of our listeners grossly underestimate the power that inflation has on their retirement. And that was actually borne out by a Natixis global survey of financial professionals that responded with 49%. So almost half underestimate the impact of inflation on their retirement plans. So, you know, if you think your your money is going to get you to the end of your life, if you're not factoring in inflation and the rising cost of goods and services, you may actually be, you know, upwards of a decade to 15 years short on. So, you know, that's why we urge people to get in contact with us, to make sure that they have a plan that they can actually feel good about, have confidence about, and give you peace of mind and not have to worry about outliving your money in retirement.

Speaker4:
That's right. And you can get started on a plan that'll do just that. Money matters with mike.com is the place to go, and you can contact Mike directly there on the page. Schedule that free, no obligation consultation with him and get you started on the road to a solid plan that does take inflation into account. Once again, money matters with Mike. Com or give them a call (704) 560-1573. 704560 1573. And you know Mike, in addition to that Society of Actuaries Research Institute STAT there about 35% of people withdrawing from their investment or savings. They also found some other really interesting responses to inflation and how it's really impacting people's financial decisions. Right. There were a few of these I think, that we wanted to highlight from this survey.

Speaker3:
There were the first one is that fact that 1 in 5, 20% of people have tapped into their retirement savings in order to exist today. So what they're doing is robbing their future self from any type of ability to enjoy retirement because they're spending that money in today's dollars, which is going to affect the overall compounding effect of their retirement dollars. That's number one. Number two is the fact that almost 70% of people have cut back on spending. And we're talking about all of the things, okay. So they're not going out to eat as much. They're not going out for entertainment. They're not playing golf. They're not doing this. They're not doing that. They're cutting back on all different types of spending to save money. Matt.

Speaker4:
Yeah. That's right. And, you know, of course, understandable. I guess that that would be the sort of number one thing that's a reaction to it. Um, to, to inflation is okay, well, if that stuff's costing more, I'm just going to have to spend less because, you know, it doesn't grow on trees, as my grandmother used to say. Um, but also, about 28% of folks in this survey postponed major discretionary expenditures so big. So it's kind of the big ticket items that they could wait on. They're like, okay, we're going to wait on that kind of thing. They also canceled or postponed vacation plans at that same rate, right? About 28% of folks canceling or postponing vacations. And then also the real eye opening here, when for me, Mike, was it looks like just a small sliver right around 2% of people in this survey. But still, the fact that anybody has to do this is heartbreaking. First of all, that they stopped taking some medications in response to inflation. Yeah.

Speaker3:
Because of the cost, which is absolutely ludicrous in the United States of America. Nobody should have to choose whether or not to have life saving medication or food on their table. Guys, we've got to do better. All right. That is utterly disgusting that they would have to make that choice. Okay. So please, I mean, if you need if you need to do something, make sure you're taking your medications. Yeah.

Speaker4:
Absolutely right. I mean, you don't want to, you know, suffer because, you know, you can't afford the cost of medications. As Mike said, nobody should have to do that at all, especially in the United States. Once again, money matters with Mike. Com is the place to go if you want to schedule a free consultation with Mike. He can actually get you a plan in place that's going to take all of these different things into account. There is no cost, there is no obligation. But you can really boost your retirement confidence and and just, you know, have have some confidence at all. If you have none, you can have a lot. When you work with Mike Zeno on that plan to really, you know, put your future on solid ground. Um, as a result, Mike, though, you know, we've talked about inflation, the rate of inflation dropping, right. As a result of that, it's kind of good news, bad news for Social Security recipients because the Social Security, um, does get a cost of living adjustment. I should say. The recipients do get a cost of living adjustment or a Cola each and every year. But because inflation has dropped, that means that the rate of that Cola increase is also dropping this year. So the double edged sword a little bit.

Speaker3:
Yeah. Because I mean the Social Security Administration designs the cost of living adjustments to kind of match the inflation rates. So, you know, in 2024 recipients saw a 3.2% increase, uh, to combat record inflation of the previous years. But for 2025, the cost of living adjustment has dropped. And it's 2.5% because the rate of inflation has also cooled down. And while lower inflation rates should slow down increasing prices, it won't do anything to lower the current inflated prices of housing, of cost, of energy, and of grocery store and food items that many retirees are facing. Okay. So a lower cost of living adjustment in 2025 means that the increase in Social Security benefits will likely be smaller than it has been in previous years, and that adjustment could significantly impact its beneficiaries, particularly those who depend heavily on Social Security for their daily or, excuse me, daily living expenses. So I have always said that I want to help you design a plan that treats Social Security as the cherry on top. We're not going to count on it, because if you can exist and prosper without depending on Social Security, if you get it, whatever you get is just the cherry on top, the gravy, whatever you want to call it. It's it's the the kiss on top of of your your your retirement. Matt.

Speaker4:
The gravy, the cherry, whatever food analogy you want to use, that is what it is. And I love that because I love food. And another thing that that I love is inflation proofing my financial plan, which is a thing like that, that I, you know, it's possible for our listeners to do. And we've got actually five quick strategies that we want to just run through here really quickly before the end of the show, so that folks kind of have an idea of what they can do to protect their retirement from inflation.

Speaker3:
Yeah. So the first one, obviously, I think this is obvious, right, is to analyze your budget and your spending habits. Right. Look for ways to reduce your variable expenses like eating out less or reducing your gas usage. Okay. Think about consolidating trips when you go to pack more into each trip. Another thing you can do is to think about maybe downsizing or relocating, because you might be able to sell your current home and then use those proceeds to downsize or relocate to a more affordable living solution. Okay. Number three. Diversify your portfolio as well as your income streams. And if you have any questions about how we can help you balance risk and reward and reduce the overall volatility of your investment portfolio, I'm your guy. Okay. You can consider investing in stocks because historically they have outpaced inflation over the long term. But that's the key. Long term it's not for short term investors. And then you might also want to explore inflation adjusted annuities because they can provide you guaranteed income streams that increase as inflation does, which ensures your income keeps pace with the rising cost of living and helps you maintain that standard of living that you've become accustomed to.

Speaker4:
Yeah, and these all go into why it's so important. These are steps that you can take, but it's important that those are part of your plan. Right. You've got to have an inflation protection plan. And we've really learned that over these last couple of years, as inflation did get really, really high and fortunately has come back down to earth here a little bit. But you've got to have that inflation protection built in to your retirement plan. Right.

Speaker3:
You absolutely do, because you want to ensure that your retirement plan is strong enough to withstand all of the pressures that inflation places upon it, right. It's highly recommended that you are working with a financial professional who does this day in and day out, and one who has weathered multiple storms and is still kicking. Right. You want. You don't judge a captain in calm seas. You look at what he's done when the you know the waves are 80ft tall, 100ft tall. All right. That'll help prepare a comprehensive financial plan. Regular financial checkups, as well as regular adjustments to your retirement savings plans are crucial to ensure that your strategy remains effective against different types of inflation pressures, and the proactive approach allows you to adjust your plan as needed based on changes in the economic environment as well as your personal financial situation.

Speaker4:
That is absolutely correct. And if you are wondering if your retirement plan is inflation proof. Well, Mike Zeno is here to provide a comprehensive review for you. You can just call or visit the website. You can go to Money Matters with Mike comm. That's Money Matters with mike.com or call Mike. As I was saying there at 704 5601573, you can book a free consultation and again start building that retirement confidence. All right Mike. Well that's going to do it for this edition of the show. It has come and gone as it usually does very quickly here, but I thank you for everything that you always bring to the table, sir. And we'll see you again next time.

Speaker3:
Matt, thank you for everything you bring to the table. But as I always say, thank you most of all to our listeners, because without you guys, we don't have a show. Listen, if I tugged on your heartstrings at all with the Propane and Power Relief Fund, I would love to have you help out on that front. So get in contact with me and whatever you're doing this weekend, I hope you enjoy it to its fullest extent and as always, make it a great day.

Speaker2:
Thanks for listening to Money Matters with Mike. You deserve to work with a licensed financial and insurance professional who can offer strategies for protecting and growing your hard earned money. To schedule your free, no obligation consultation, visit Money Matters with mike.com or pick up the phone and call 704560 1573. That's 704 5601573. Not affiliated with the United States government. Mike Zeno does not offer tax, legal or investment advice. Consult with your tax advisor or attorney regarding specific situations. Opinions expressed are subject to change without notice. These opinions are not intended as investment advice, nor do they predict future performance of any product. All information provided is believed to be from reliable sources. However, we make no representation or warranty as to the accuracy of any statement. This information is intended to be educational in nature and does not provide a guarantee or a specific result. All copyrights and trademarks are the property of their respective owners. Amara Life assumes no responsibility or liability for the content of this message. The information contained herein is provided on an as is basis with no guarantees of completeness, accuracy, usefulness, timeliness, or the results obtained from the use of this information.

Speaker1:
Remember, all of Mike's listeners receive a free financial consultation just for listening to the show. Visit Money Matters with Mike comm to learn more and schedule an appointment. Thanks for listening to Money Matters with Mike and subscribing wherever you listen to podcasts.

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