Big 6 Questions on Retirees’ and Soon-to-Be’s Minds (Part 1)

Everyone seems to be worrying about how rising inflation will affect their finances. Many of those in retirement or nearing retirement are understandably worried to see if their savings and investments will hold up. In this new podcast series, Correct Capital Wealth Management's financial advisors Colin Day and John Biedenstein tackle some of the most pressing and current questions and concerns soon-to-be and current retirees face today. On today’s list:

  • Will _____ affect my ability to retire?
  • Will inflation wreck my retirement?

For recent investment news and our take on the current market, retirement planning, and investment, listen to our podcast Capital Conversations or view our recent blog posts.

Below is the transcript of Part 1 of our most recent Capital Conversation podcast episode, "Big 6 Questions on Retirees’ and Soon-to-Be’s Minds."

Colin Day: Welcome everyone to Capital Conversations. I'm Colin Day, Certified Financial Planner Professional. With me today, John Biebenstein. John, how the heck are you?

John Biedenstein: I'm doing great.

Colin Day: Are you?

John Biedenstein: I'm fabulous.

Colin Day: Wow. You know, we were commenting just a moment ago about how good we look in our very colorful shirts. I'm wearing pink on Wednesdays, John wearing his purple.

John Biedenstein: He didn't want to wear the same, so...

Colin Day: Yeah, that would be embarrassing, right? So John, we are doing our first series of podcasts. So whether you're able to see our colorful shirts or not, if you're listening to the audio version, this is the first series podcast we're doing, where we're taking a topic and we're gonna split it out into at least three different episodes.

And the reason is because there's just so much to talk about regarding this particular subject matter. What we're going to talk about are the six questions we're hearing from soon to be and current retirees. We discussed this actually at a recent client event, John, and we got some pretty good feedback in regards to what we talked about there.

If you had to sum up what we talked about in one word, or maybe one phrase to make it a little bit easier, about what we're hearing from this particular age bracket of, let's say, 50 all the way up into the 70s or 80s. How might you describe how people are feeling right now regarding the market, the economy, and socially? What would you put it at?

John Biedenstein: I think everyone has a little bit of a concern in regards to the amount that they set aside for retirement. Is it going to be enough? And what are these factors that are impacting that? There’s inflation and some of the things we're going to talk about. And the concern just adds to a big part of what we do, which is a focus on planning, right?

Colin Day: Exactly. So let's jump into the first one, which is: "Will _____ affect my ability to retire?"

Concern. I thought that was an excellent way to put this because there is something going on right now (and we're recording this at the end of May, 2023), but there is always something going on that makes us feel uneasy as humans, not just soon to be retirees or current retirees, but just human beings.

And there's always going to be something. So lots of times when I'm picking up the phone and I'm talking to a client, they're going to be letting me know what is the current thing that is bugging them. So, we talked about some unprecedented things that have occurred over the past couple of years during our presentation. We talked about COVID, we talked about, in the past couple months, bank failures. More recently, the debt ceiling conversation. John, what are you hearing about? If you had to say, what was the one thing that many people are contacting you about personally, or asking you questions out on the street as a financial advisor, what would you say that is?

John Biedenstein: It's two things. I think number one is the high inflationary period that we're going through, so it just seems like things cost more. The other thing is with the market uncertainty. For a person that's in retirement or getting close, “When do I start? When do I want to take my withdrawals? And are there ways that I can do that effectively so that it kind of levels things off?”

Colin Day: Right. The whole reason we wanted to broach this question, of course, is because there's always subject matter that is going to affect us. As I try to remind folks when they're watching financial news, they're just trying to get you through the ad break. That's all they really care about. If you're watching the nightly news, that's why they don't lead with the puppies being adopted from the shelter or the people being rescued from the burning building. They lead with death, destruction, and harmful things that are going on. That's what keeps your eyes, unfortunately.

So when people are worried about being in retirement and existing in retirement when these unprecedented things are happening to us, I just like to remind folks that, “Hey, we're always going to be in unprecedented times. We might have history to fall back on, but we probably will just incur something else in another three month news cycle as well. So, why worry so much about the things that are out of our control?”

John Biedenstein: Correct. And it's really – which is going on to what you're talking about – worry about the things you can control, not the things you can’t.

Colin Day: Yeah, exactly. So John, why don't you go ahead and you give us number two.

John Biedenstein: Number two is “Will inflation wreck my retirement?” With the high inflationary period we're going through – again, it's unprecedented – “Am I gonna have enough to save for retirement? Is what I set aside going to be enough?”

So, the inflationary period we're going through right now, trends have indicated that it's a period we're going through and things might come down. We went through a long period of time with very, very low inflation and then it just skyrocketed up. We've seen it come back a little bit.

So the important thing is timing your withdrawals from the retirement account and having those buckets of money that you can withdraw money from. A Roth account, a retail wealth management account, or pull the money out of that taxable retirement plan or IRA. Planning ahead is really critical.

Colin Day: Yeah. So for those of you that are listening to this podcast and might not have the chart in front of you, one of the things we talked about was, if you're familiar with looking at a recent chart of inflation, we're seeing that we started lower and then it goes up and to the right, so to speak, meaning that inflation kind of shot up in the year 2022.

Now, thankfully towards the end of 2022 and heading into 2023, it's been cascading down very nicely, thankfully. But, one of the things that I showed our group that we were presenting on was what's called the “30 Year Breakeven Inflation Rate.” And really this is more like a poll than anything else. If I was going to invest in a 30 year bond, what is the interest rate that I need in that bond to battle inflation? What do I think that is? It doesn't look like the inflation bubble that we've been in over the past 17 or 18 months. What it looks like is just kind of a flat line. It does go up a little bit, but then it's kind of coming back to what we saw basically back in the early 2010s.

So, the idea there is that the more space you give yourself to consider the use of your money – so, if you're a pre retiree, meaning you're thinking about retirement, trying to plan that out – we've got the space to really consider the fact that inflation doesn't look great, but, if we think about our money lasting us from age 60 all the way to age 90 – because we all hope to live very long and fruitfully in retirement – the inflation picture doesn't look as bad. Yes, it's a blip. Yes, it hurts. Any increase in what we think the expected inflation rate might be could be harmful, but when it came to understanding the time period in which we might be using these funds, that gives me a little bit of solace, at least as a financial advisor to say, “Hey, long-term opinion is that it's relatively flat. It's not increasing to a dramatic sum where it's going to be detrimental to the most.”

I think that's a good place to maybe pause for this particular edition of the podcast. John, any last words you want to communicate about those two topics? Again, we talked just about inflation and then we talked about the ability to stay retired.

John Biedenstein: Yeah. Again, the big thing is planning. Work with us, work with a financial advisor and plan ahead. Don't be surprised.

Colin Day: Yeah, alright. Well John, thank you very much.

John Biedenstein: Thank you. And thank you all.

Colin Day: Thank you.

The opinions expressed in this program are for general informational purposes only, and are not intended to provide specific advice or recommendations for any individual or on any specific security. It is only intended to provide education about the financial industry. To determine which investments may be appropriate for you, consult your financial advisor prior to investing.

As always, please remember, investing involves risk and possible loss of Principal capital. Please seek advice from a licensed professional, correct. Capital Wealth Management is a registered investment advisor. Advisory services are only offered to clients or perspective. Clients where correct Capital Wealth Management and its representatives are properly licensed or exempt from licensure.

No advice may be rendered by correct Capital Wealth Management unless a client service agreement is in place.

Capital Conversations by Correct Capital Wealth Management

At Correct Capital, our St. Louis, MO retirement consultants help business owners, individuals, and families live the retirement years of their dreams. As a fiduciary, our only legal and ethical concern is doing what we believe is in your best interest. If you're looking for 401(k) services, retirement planning, or have any other wealth management needs, call Correct Capital at 877-930-4015 or contact us online.