By William “Bill” O’Neill, AIF® 

I speak with investors every day. And even though most of them have been around the block a time or two, market conditions like we have today are frustrating. Perhaps you feel the same way.

You might have been aiming to save a certain amount for retirement – and maybe you’ve already achieved that goal. But, considering inflation, an unpredictable market, and a lack of guaranteed income once your paycheck stops, you might be reconsidering whether you’re completely prepared. There are a few reasons why investors in or approaching retirement should seriously consider a financial plan.

Inflation at 40 year highs

Daily life is arguably the most expensive it’s been in 40 years. May’s year-over-year inflation rate was 8.6%. Gas prices recently hit a new record high and are at nearly $5.00 per gallon on average. Energy costs increased nearly 35% over the last year, while food prices rose by 10.1% in May from the previous year.

When we consider the history and the future of money, we see that the threat of inflation has always been around and could be with us for some time. Even with the Fed’s Open Market Committee (FOMC) applying the brakes to the economy by raising the fed funds rate 150 basis points (so far), there are many other factors at play. There’s the war in Ukraine, continued supply chain issues, and strong consumer demand. You need to have a plan to protect your retirement savings from the eroding effects of inflation.

An unpredictable market

We saw record highs in 2021, but 2022 is looking like a different story. The market is reacting to the prospect of slow economic growth and the reality of high inflation. Rising interest rates are what has spooked the markets the most. It makes sense. Since World War II, 11 out of 14 monetary policy tightening cycles have been followed by a recession within the next two years.

Stocks (measured by the S&P 500) hit a new weekly low for the year on June 13, making it 11 weeks out of 12 of market losses. I know this is hard for investors. I’m investing for my family’s future too. But times like these underscore the need for a formal plan so that emotion doesn’t take control of your decisions.

A lack of reliable retirement income

While most retirees will collect Social Security, that monthly check likely won’t cover all their expenses. Those dollars might not go as far as they used to because Social Security benefits may not keep up with inflation. Social Security benefits have lost a third of their value since 2000, according to a recent study. This is largely due to the price increases of housing, food, and prescription drugs.

Without a pension to supplement Social Security benefits, many retirees may fear running out of money later in life. That’s even if they’ve saved a substantial amount of money for retirement. If you don’t have a reliable, regular source of income in retirement, you might consider creating one or looking at financial planning strategies to help ensure you never outlive your savings.

The ownership structure could have additional estate and liability protections for those same beneficiaries, such as divorce, lawsuits, or increasing the beneficiaries

Make a plan

Retirement isn’t a single moment in time. With any luck, you’ll be making important decisions about your money for 20 or more years. But things have changed: If you were retiring 40 years ago, you could probably put all your money in fixed-income investments and live off the super high yields. Today, growth investing should be part of your strategy if you want to stay ahead of taxes and inflation.

MoneyLetter’s sister company, Asset Strategy Advisors, can explore options with you and help you decide on a path forward based on your specific needs and retirement vision. While today’s retirees face new challenges, there are tons of financial planning strategies that can help investors of all ages. We can put them into a formal financial plan tailored to your specific needs.

Here’s some additional retirement investing information. I thought you might enjoy reading our “How to Create a Financial Wellness Checklist.” In it you’ll find 8 questions to help your financial well-being, including:

  • Am I saving enough for emergencies?
  • How much are my retirement savings worth today?
  • Do I have a will and is it up to date?

Here’s the web address to access this free article:


Bill is a Financial Consultant for Asset Strategy and is an Accredited Investment Fiduciary®.

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