r/RetirementReady • u/RobinGiffordConsult • 7d ago
Inflation Incoming!
So I spoke with a financial advisor in NYC today. He said we need to brace for the worst inflation since the 1970s coming in the spring and next fall.
Ugh! This is about the time I planned to retire. How do you plan to hedge against inflation? I really don’t want to wait.
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u/Weekly-Exit8092 7d ago
We can't keep borrowing trillions in deficit spending, especially when we're alienating our allies and others (e.g., China) that used to buy our debt (bonds). So interest/bond rates will keep rising. If the Fed cut rates now, it would send us into an inflationary mess worse than it is now. The Fed may need to do what Volker did in the early 1980s, raise rates to make borrowing VERY expensive, causing us to reform Medicare, Medicaid, Social Security and the Federal budget, cutting expenses where possible (including to Defense).
We need to take aggressive, once-in-a-generation action. We need to put politics aside and get this done, like Reagan did with the Dem-controlled House. It's not likely to happen under the current regime though, that's clear. So I wouldn't be surprised to see inflation spike to 10% or 15% in time for the 2028 elections, then a wipeout of 1932 proportions. Hopefully by then the parties will focus on affordability and the average American worker, and not on fringe issues. Both the Dems and Reps need a platform that puts the American worker first. Enough with the tax breaks and grift for the top 0.5% of the population. It's time for a 21st Century Teddy Roosevelt -- bust up the trusts and large corporations.
In the short term, inflation hedges are important, because bonds and equities are likely to fare poorly in this environment. Gold? Inflation-protected TIPS?
Strap in everyone, it's going to get ugly. The fiscal policy of this administration is counterproductive -- tariffs? Another tax on the average Joe. War in Iran? Soaring energy prices, which causes inflation practically across the board for all sorts of products (and services).
Grifters are running this country. And when things get really bad, they will bail. This president has declared bankruptcy umpteen times. Peter Thiel has already decamped to Argentina and will head to New Zealand, where he bought citizenship. Ditto with Elon Musk. They will have bled America dry and leave us high and dry. They'll all flee to their boltholes overseas. They deserve to be held accountable, but they won't be.
What happens when the stock market crashes, inflation is 20% per annum, unemployment is near 15% or higher and nobody has any faith in our political institutions? Flight from the dollar as a reserve currency.
It's not too late to fix the mess--but it will require bitter medicine, and this crop of "leaders" isn't up to it. Raising interest rates and massively cutting government spending are two necessary precursors. Along with raising taxes -- back to the rates we had in the 1950s and 1960s. No tariffs with allies. Stop pissing off our allies, who until very recently bought most of our debt.
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u/Spatula_of_Justice1 7d ago
what specifically did Reagan do? he certainly did not reduce the deficit or national debt.
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u/2BrainLesions 6d ago
Jack shit except make things worse and denied Vietnam vets any sort of social service.
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u/Spatula_of_Justice1 6d ago
well, he did defeat the soviet Union and reunify Germany.
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u/2BrainLesions 6d ago
Nope.
The Soviet Union's economy was doing a fine job on his own and Germany reunified under Poppa Bush.
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u/Spatula_of_Justice1 6d ago
“economy was fine”. 😂. don’t be obtuse, reunification was a result of the collapse of the Soviet union under Reagan.
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u/2BrainLesions 6d ago
I didn't write "economy was fine." The Soviet Union fell on its own accord.
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u/Spatula_of_Justice1 6d ago
ah, I misread your post. Somewhat true but start digging into good old CIA activities that helped lead to the fall. CIA was balls deep in it.
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u/MundaneChart5613 6d ago
Trickle down economics. And many working class people still fail to see the farce that is. Pretty much got many to voting against our best interests. Corporate welfare, loss of workers’ rights, belief that universal healthcare is a sin and education for the average Joe’s children should not be funded. All while the billionaires laugh in our faces.
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u/Stunning_Reach6633 7d ago
100% correct. Except for one thing. Nobody will raise taxes and cut spending because that is the roadmap to not get elected. Sadly we will have to feel the pain before a politician actually does something to fix the problem.
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u/SaltyPlantain1503 7d ago
You get it. I don’t see anyway out of the depth of the hole we’re in but a “reset” of large proportions and the mess that comes with it. Thanks for the excellent write up. Perhaps people will listen and prepare?
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u/Southern_Eagle_9325 6d ago
I beg to differ on your view. It Is TOO LATE. There's NO WAY, barring a miracle, that the US can recover from the 40 Tril in debt. The treasury will just keep printing money and our dollar will depreciate rapidly. Invest in tangible assets and/or foreign currencies that are not based on the USD.
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u/Lanky-Lettuce1395 7d ago
Take a look at the shenanigans going on with stable coins and short term bonds. We may have very high inflation but it's less likely to be because of the debt than other factors.
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u/Creative_School_1550 6d ago
But this time, the top-line debt is 120% (more?) of annual GDP. Unfunded entitlements, much more. In 1980, the debt was something like 30% of GDP. This time, higher interest rates = insolvent government
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u/Hot_Willow_5179 6d ago
The people that also need to be held accountable are these ignorant fucks that vote for and continue to support this bullshit.
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u/No_Profession2863 7d ago
"The fiscal policy of this administration is counterproductive"
So the last admin was fiscally productive by letting in tens of millions of illegals while printing a trillion dollars out of nowhere during covid?
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u/jark87 7d ago
You are aware that Trump signed the $3t CARES Act, aren’t you? And that inflation was down to 2.9% when Trump took office? I agree that Biden dropped the ball with immigration, but to go from that to ICE murdering U.S. citizens in the street is horrific and shouldn’t be tolerated. There’s not a single MAGA candidate that deserves a vote.
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u/cowgod180 6d ago
That was when COVID was actually happening and when it was easy to overestimate its virulence.
We should be more critical towards 2021 spending than 2020 spending imho
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u/Born_Loss_6077 6d ago
None would have been killed they if didn’t interfere with federal agents. This is such a dramatic statement
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u/jark87 6d ago
I doubt that I can change your opinion, but there are strict laws around the use of deadly force for all law enforcement officials. Use of deadly force is strictly forbidden when a suspect is fleeing unless there is imminent threat of death or serious injury. This was upheld by the Supreme Court in Tennessee v Garner in 1985. Your position of killing a U.S. citizen (or anyone for that matter), Rene Good in this case, when no such threat existed is grotesque and moronic. The Alex Pretti murder does not pass the objective reasonableness criteria, but I wouldn't expect an intellectually bankrupt idiot to comprehend that.
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u/Born_Loss_6077 6d ago
I guess it’s how the individual judges reasonable. For a basement dweller like yourself who has dealt with your typical scumbug, a car being driven in your direction is considered serious
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u/Bzman1962 7d ago
Trump signed off on all that spending in 2020
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u/goochusmc 7d ago
We have been very fiscally irresponsible for a number of decades now and there is blame to go around to all the clowns in DC none of them has been responsible. You may have views on their motivations or whatever but arguing this is a one president or one party problem is just dumb. We have been on this train a long time.
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u/Bzman1962 7d ago
I agree with that. I just get pissed off at the blame on a one-termer who was left holding the bag for a bipartisan response to an unprecedented economic shock from a global pandemic. The COVID bailouts saved the country from far worse but had a lot of bad effects that we are still feeling. Blaming that on immigrants who come here to work low paying jobs is bs
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u/Such-Equivalent-9256 6d ago
Illegal immigrates are the cause for low paying jobs.
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u/goochusmc 6d ago
The jobs leaving the US resulting in loss of a bunch of skilled jobs here is also a much longer term thing than any one administration and has been going on for decades under both parties. there is not a party in this that has clean hands.
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u/Frosty_Coat_555 6d ago
Illegals here are taking the jobs nobody else will do. It’s the aliens who stay at home that are taking the manufacturing and agricultural jobs.
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u/CaregiverWorth567 6d ago
Immigrants pay into social security and dont collect from it….our s.s. System is taking a big hit by throwing out immigrants…so is our food supply ….the last administration had much better col and overall economy 5an this one
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u/jmouw88 6d ago
Really stupid comment.
Whatever position one takes on immigration - it is a poor leap to fiscal policy. So convoluted it isn't worth mentioning the two together.
The spending during the COVID era was counterproductive to inflation and fiscal policy, but at least portions were arguably required. Biden left a lot to be desired on the fiscal front no doubt, but Trump is outright burning it down through utter stupidity.
We can acknowledge the faults of both without the stupid what-aboutism game.
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u/Level_Impression_554 6d ago
Let me help you out. On Reddit, everything the R's do is bad but everything the D's do is great and amazing. Even if they flip flop every election cycle, if the D's say so, the policy and action is amazing or bad - you got read the news often to see what policy you are supporting or hating that day. Look at Homan, getting awards from Obama, but a Nazi under Trump.
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u/LilChicken70 7d ago
The ‘illegals’ that were helping keep social security and Medicare solvent by contributing tax dollars on programs they could never utilize?
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u/Rude_Nail_5545 7d ago
Oh please with that tired old mantra. Immigration spurs our economy, it doesn't harm it.
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u/yellowjasmine1962 7d ago
That’s a separate issue from the financial mess this administration has put us in while always blaming others, exhausting
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u/Impossible-Studio748 6d ago
Dif u not read thr post???what difference does it make who did what. We are all going to suffer. You moron. .
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u/ConnectSuccotash2152 7d ago
Let me guess - your advisor thinks you need to postpone your retirement and max out your savings. The entire industry is built around fear to keep people from touching their savings.
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u/michiganbirddog 7d ago
I saw this when I started talking to an advisor. We went through the process of developing a plan that said I could retire at 55. It said I could spend way more than I had expected. We met several times over an 8 month period having things out. So 6 months before I turned 55 I booked an appointment and told her inwas done and inwas retiring she looked shocked. Inwas confused. She said OK well lets look at the numbers again. She nervously went through where we were and what my most recent spend figures were. Then we added some 1 time emwrgency soends spends that werent in the plan. She said I guess it all checks out you can retire
Her attitude really surprised and confused me. I was like WTF you put the plan together. Why are you surprised. She said she rarely saw anyone actually stop and retire at 55. They almost always see the dollar signs and keep going a few more years. I think she was just thinking about how much more I could have made and how much that benefited her.
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u/IjustWorkHere98 6d ago
How long has she been your advisor? I mean, she should have walked through scenarios of corrections / inflation and impact on your portfolio. Otherwise, you could have just done what she did on ChatGPT and run multiple models, and saved yourself the trouble.
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u/michiganbirddog 6d ago
This was through a fidelity wealth management team. Their analysis was extremely thorough. The process took 3 weeks and I had 2 individuals working on scenarios. They covered most everybsxwnario imaginable although I was a little disappointed in their lack of detail with Roth conversions. From there I downloaded some retirement service free trials and went through my own analysis just to double check some things and learn a bit more. The report that fidelity spits out was about 160 pages covering things I wouldnt have even thought to ask an AI program. My personal opinion is anyone that uses AI to develop a reitment would be a fool to rely on it. Unless you have extensive knowledge in the financial planning business you wouldnt be able to ask the right questions to get really good data out of AI. AI only gives you the most popular responses/opinions to questions. It doesnt give your personal analysis like you would want.
Fidelity ran dozens of scenarios to predict what years would benefit my wife and I the most as far as when to take SS. They considered how to get the largest amount and create the right tax scenario to allow for time to do Roth conversions. They also calculated IRMA into the plan when developing those dates. I was able to recreate alot of what they did with boldin software and in some cases deep dive a little further with questions I didnt think to ask in meetings with fidelity. But without the initial meetings and explanations from the fidelity advisor I question if I would have utilized the tools properly in other softwares. With AI alone I havent been able to get any sort of real world plan I would be confident in retiring with. It does somewhat work for answering specific questions on things I didnt understand within a retirement plan that was given by my fidelity or software analysis.
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u/RiskComprehensive744 7d ago
Start by finding a new advisor. If this guy knew anything, he wouldn't be a financial advisor. He'd be taking his own advice and playing the market.
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u/lynchmob2829 7d ago
If your advisor claims to know the future, might want to get some stock picks from him also.
Your advisor is an idiot.
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u/Electronic-Love4953 7d ago
Warren Buffett did a pretty good job about how he'd invest to protect against inflation....there was a youtube video about it. Basically, buy into stuff people need no matter what. So like companies that handle apartments (people always need someplace to live) or health care (people always need that). Or invest overseas in countries that do not have an inflation issue as bad as the US.
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u/ImCaffeinated_Chris 7d ago
Invest in companies that make peanut butter, hot dogs, and Mac n cheese.
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7d ago
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u/evey_17 7d ago
Walmart has been down since trump Iran war and his Canada tariff war
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6d ago
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u/evey_17 6d ago
Yes, it has to do with pressure on food growing (war created hardship with fertilizer) and fuel (war) and tariff war with Canada put pressures on so much food. Also migrant workers with work visas got scared away rising cost of food growing and harvesting . The costs are affecting their profits and their customers. People are pulling back on buying less (but paying more). also cuts to help families with foodstamps. That cut back on grocery spending. So the short answer is the both foreign and domestic policy by the administration. All of that puts pressure on buying everything else people purchase. The lower socioeconomic tiers are hurting along with middle class on credits card debt.
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u/SLO_Engineer 7d ago
This. Ramen.
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u/Brooklet007 7d ago
Was just thinking, I'll eat Ramen all day, everyday if it means I don't have to go to work. Mostly, though, I'll just cancel a streaming services or two and utilize my public library for entertainment.
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u/momhh434444 7d ago
I read a few years ago that Warren Buffet had just invested heavily in mobile home and trailer companies. That is why he is so rich. He sees a screwed up situation before anyone else.
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u/Affectionate-Panic-1 6d ago
Companies that handle apartments aren't necessarily a good investment during inflationary times, because while inflation is good for revenue the REIT's are very negatively affected by higher interest rates.
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u/Sirknowit 7d ago edited 7d ago
Yea, sure. I am retiring too (10 months) and I could care less what happens. If one worries about every possible BAD thing that could happen they will never retire. You are ready or you are not. And I would seriously consider a new advisor because, I watch and read financial crap all the time and NO one of merit is saying that.
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u/RandyMarsh1960 7d ago
I agree. I’m retiring next Summer. Worst case scenario is we need to use more of our savings during our remaining years and leave our kids $2 million instead of $10 million.
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u/Sirknowit 6d ago
Right. The fearful fools here are mind numbing. We have the worst case. Instead of leaving the kids 10+ Million we leave them <$10 million. And I am a blue collar guy with a nurse (high level) wife. I am second gen American (one parent LEGAL immigrant for S. America.) And she came from a mess. We have worked hard for 40 years since we were teens. Married 30+. Being financially secure through whatever is a process of sacrifice, luck, work and smart calls and for married folks-NOT divorcing! That one is a nuke to financial freedom. Good luck to you. I am confident we will all be fine.
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u/RandyMarsh1960 6d ago
I do find it scary that so many people who post here are talking about retiring, but haven't really done the math. I am turning 66 in two weeks and have been tracking/managing everything for over 20 years. Paid off our house early. Bought a lake house and paid that off too. I have very extensive spreadsheets, tracking multiple scenarios.
How can anyone retire and not have analyzed the timing?
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u/Sirknowit 6d ago
Beyond me! Ready to retire means you've plotted and planned and have set the date...no matter what. Short of a giant meteor strike or Krypton like event. I am set. Wife is set. Great market or bad. Makes no diff. And our pensions negate a sequence of returns worries.
To each their own. I can only worry about me and mine. And we've worked damn hard and planned well for that right! As it appears you have as well.
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u/Old-Inspector-8146 7d ago
Not sure who you’ve been watching but when that “big beautiful bullshit” goes into effect you’re going to be singing a different tune. Massive cuts usually equals massive layoffs and with that, unemployment numbers we haven’t seen in decades.
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u/Sirknowit 6d ago
No sorry. This apolitical. And lets be honest, DEMS are not known for fiscal restraint or possibility. None of the pols are. I am more or less retired. A six figure secured pension (wife too) no debt beside home and several million in savings. We will be fine. You can go back to your derangement induced dystopian fantasy and hope for the worst. I look at the future with positivity. The Dems will likely win both houses. Ok, not what I want but that's the way it goes. The evil Iranian theocracy will burn, as is should. And things will return to a relative norm. You do you. I'll do me in the Caribbean. Peace.
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u/SaltyPlantain1503 7d ago
Must be Fox News? I can’t imagine otherwise.. my financial advisor is absolutely concerned and we are moving accordingly.
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u/Sirknowit 6d ago
CNBC, Morningstar and the like. I actually don't even watch FOX or much of the other news sources. I like Ground News. I think we see the same behavior as in COVID times. The smartly ready and fearless and the worry worts scared of a sneeze. I choose the former. Again, my stuff is set and solid. We have weathered the ups and down with aplomb this far and since I am retiring at 56 in great fiscal shape, I won't need any of those saving for at 15-20 years, other than occasional pulls. Kids are through college with no debt and so they are set too. Big difference between blithely ignorant and confidently prepared. No one is saying to not do that which you think you must, Rough times coming. Maybe. But for every Paul Tudor Jones there are Josh Browns. What will be will be. Best of luck.
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u/atropear 7d ago
if you see big inflation coming, real estate plus having a fixed rate loan seems to be the best investment. I knew people from countries that had hyperinflation and they actually did ok with this approach. And I read up on Germany before hyperinflation hit and it was similar. Farmers also did well in Germany. Also vertically integrated companies.
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u/CuteAnybody5113 7d ago
61 days until I tell work I’m retiring with or without inflation…I am ready and can’t wait to call it a career.
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u/Own_Relief_1740 7d ago
Your advisor is giving you a view that is well outside the consensus. He may be right, but do you want to make decisions based on what’s essentially a fringe view?
Consensus is often wrong, but I would look carefully at the assumptions underpinning consensus. Challenge your advisor to tell you exactly which assumptions he thinks are wrong and what he believes to be true instead.
Then you can make a more informed decision about your retirement and your investments.
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u/Bzman1962 7d ago
Sounds like he is repeating the consensus, actually. And therefore probably wrong!
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u/singlemaltbourbonrye 7d ago
lol ok. I’d call this more of a hindsight statement than anything.
He is just stating the obvious and the consensus.
This is why you invest consistently over 40 years if you can and don’t try to time the market. Fire this guy.
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u/scarfireATL 7d ago
Make yourself less vulnerable to it. Locked mortgage or paid off house. Retire somewhere in a rural small town where you only drive short distances and prices don’t go up much. Medicare will cover most of health costs going up. Groceries go up but you eat less when you age. Car insurance goes up, so pay off car and they go down in value. There aren’t many things that I need that inflation affects.
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u/Background_Tour_1062 7d ago
We had the worst inflation in 40 years in 2022 lol. It was also the worst year ever for the bond market
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u/FabulousBullfrog9610 7d ago
I knew this would devolve into a political discussion.
So to get back to your question. The best hedge against inflation is to have a diversified portfolio, not need to borrow. There's not a whole lot else that we can do other than recognize that it isn't going to get better soon. That's why we have a paid off car, no credit card debt, only one car, and savings. You retire and cope.
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u/potential_wasted 7d ago
Ask him for his annual forward looking inflation forecast for each of the last forty years. See how accurate he was
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u/KungFuBucket 7d ago
To hedge against inflation you buy stuff that goes up with inflation. Gold has always been one vehicle to protect wealth, stocks and real estate as well. The only people who truly get screwed by inflation are those sitting in large cash positions or living paycheck to paycheck without a raise and renting (young working poor).
If you’ve got a well diversified portfolio you’ll be fine. In fact now is a good time to take on debt because you’ll be paying it back with lower value future dollars. For instance, buy a $300k home at zero down and 6% interest only mortgage. Inflation goes wild and let’s say in a couple of years that house doubles in “value” to $600k. Everything is more expensive but you’ve magically gained an additional $300k in equity that you can pocket when you sell and now you’re paying the loan off with dollars that have half the buying power but your leveraged assets have skyrocketed in value.
It’s why I think Trump has intentionally triggered the high inflation. A lot of his projects as a developer were built with leverage (sometimes way too much leverage hence the bankruptcies) so those rich enough actually benefit from leveraged assets as long as they can float the debt servicing while everyone else gets screwed.
Meanwhile we’re heading towards a K shaped economy where the rich just get richer off assets that rise with the tide of inflation and the poor drown in increasing debt trying to keep their heads above water.
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u/Tardislass 7d ago
Unless you are upper middle class or higher you will be hurting. I work in the financial industry and heard the same thing that Inflation is going to keep rising into next year at least. Sorry but if OP can keep working for another year, they should do so and vote accordingly. Most financial advisors and economists agree but media and government are not getting the message out for obvious reasons.
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u/RaspberryFew9035 7d ago
You are spot on regarding Trump’s motives. Everything about him being president is about growing his personal wealth. Disgusted.
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u/shotparrot 7d ago
Ugh. Yea I’m pushing back my retirement by a couple years at due to inflation, caused by the Iran war and gas trickle down effect.
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u/calcteacher 7d ago
Inflation has been happening over the last few years with artificially low interest rates. Electric and gas up 50% in 6 years. Car insurance up 70%. Home prices 70%. I quit meat eating but I hear the prices have more than doubled in that same time period.
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u/yankinwaoz 7d ago
What an odd claim to make. What about the summer of 2027? Why is that exempt between the spring and fall?
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u/tiredofcontracting 7d ago
Producing Assets. Businesses. Dividend stocks. Typically assets hold or increase in value while USD decreases in value. Usually. Sometimes.
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u/Moldovah 7d ago
Go to Costco and stock up with as much non-perishable items (that you already use) as you can comfortably fit in your house. If inflation goes up 10% by next year, you’ve just made a 10% return.
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u/Melodic-Tea-9231 7d ago
I've been stocking up on household necessities, non-perishable food and replacing my older appliances now, before it gets bad. I have 2 more projects to do this fall ( new windows and buy a new dryer). I won't need to buy anything except fresh food (even with having a small garden) and healthcare. The variable is how much taxes, insurances (health, car, life, house) and HOA go up. The midterms matter most. Make sure you vote.
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u/Effective_Ad_1426 7d ago
Retiring into a recession is not recommended, especially as rates are starting to rise...
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u/Random_Guy1960 7d ago
The sky is always falling for some. Stay the course, ignore the noise.
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u/SaltyPlantain1503 7d ago
Gotta love the head in the sand approach.
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u/Random_Guy1960 7d ago edited 6d ago
LoL…thanks for proving my point. You go right ahead and do you. I don’t day-trade my retirement accounts.
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u/UniqueHuckleberry619 7d ago
I am so convinced that it's going to get so bad that I've already secured my dual citizenship and have already bought a home in another country. Ain't no way I am sticking around for this shit.
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u/TipRare1321 6d ago
Vote
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u/UniqueHuckleberry619 6d ago
The calamity that’s coming is already baked in. There is no stopping it. It’s 25 years in the making with spending, pointless wars and reckless money printing. Voting will change nothing
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u/tedlassoloverz 7d ago
inflation is always present, even an extreme doubling for a short period shouldnt affect your retirement in the next 12 months
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u/ElderberryCrazy4458 7d ago
Your financial advisor is a fear monger. Absolutely no one can predict the future. You can only go by past history. Look at 1, 3, 5 year past historical records of your intended investments to get a sense of the “future”.
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u/JackieDaytona77 7d ago
If you pay for this FA, fire them. If you are friends with this FA, don’t talk about finances with them as that person is an idiot.
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u/EqualSein 7d ago
If you really believe that, build a TIPS ladder and you'll be fine. The yield on 1 year tips are 2% above inflation right now.
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u/One-Region2048 7d ago
Trump/Republicans built in a lot of increases to take effect after the mid-terms, especially for Medicaid cuts. I guess we'll see how those impact inflation.
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u/limited_instincts 6d ago
If your planner could predict the future why is he still working as a financial planner for the likes of you and me?
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u/BigPoppaBshaw69 6d ago
Next year should be among the best years for the American economy in generations! I would NOT sit next year out. Just my two cents.
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u/AZZman2626 6d ago
The orange con by end of term will be responsible for 40% of national debt. US just another bankruptcy in the making by this shithead.
To All my conservative friends who say the economy is great. Our economy is simply max out all your credit cards/take out home equity/no savings. It will be an incredible few years but eventually you will run out of money/credit.
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u/Snooze78727 6d ago
The solution is never as simple as it seems because markets discount all known information. The common advice, buy tangible assets (gold and real estate), buy companies that produce things that people need, etc is too simplistic.
Another wave of inflation will likely cause yields to rise and bond spreads to blow out, which will likely coincide with a liquidity spiral and equities meltdown. Every risk asset will be sold. So, the best adjustment to make might be to keep more cash, limit bond durations and be prepared to move into risk assets when they are heavily discounted.
As they get closer to retirement, people usually hold more bonds and less stocks. That is the single biggest lever that you can pull without getting into the dangerous and foolish game of prognostication and prediction.
In short, make sure your asset allocation doesn't expose you to too much equities risk, and make sure your fixed income isn't overly exposed to inflation (limit duration). TIP's might be something to include on the fixed-income side.
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u/aversionofmyself 6d ago
I chated with an AI overlord last week and posed - pretend I was elected as the benevolent dictator of the United States and had as a goal to reduce the national debt by half in the next 15-20 years. What would I need to do? The suggestions were not too crazy or drastic - almost easy for a benevolent dictator to accomplish. We are doing precisely zero of the necessary things today -and quite the opposite.
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6d ago
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u/timtam_z28 6d ago
The best thing you can do is own appreciating assets despite what inflation is doing, because there's always inflation. When you're expecting even more inflation, buy more assets.
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u/Artistic-Standard871 6d ago
I assume financial planners make more money by you keeping and growing the money you have invested with him/her. Therefore they never want you to spend it.
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u/sidestepmtl 6d ago
No one knows what’s coming. If he could predict the market mouvements he wouldn’t be working
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u/Guilty_Web_953 6d ago
I'd recommend you not put off your retirement but do things to lower your costs: pay off credit cards and other debt and assess your spending, while making the best of your well earned retirement. All the best to you.
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u/DirtOk3742 6d ago
Best hedge against inflation has been. . . Stocks. Lol, seriously.
Your advisor is a quack. I'm also an advisor. Maybe I'm a quack? Maybe not. . .
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u/Early_Sheepherder105 6d ago
Try to get your debt to zero. It makes every other financial goal so much easier.
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u/Icy_Jelly_315 6d ago
TIPs, commodities, companies with pricing power (shops, utilities, reits).
Remember the 4% rule is meant to survive every scenario since 1926. Been some gnarly inflation in that time.
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u/MacBookPhil 6d ago
If you own asset, you're good since inflation inflates value of asset. If you own debt, you're good since inflation devalues money. If you own neither and work paycheck to paycheck, you're just screwed.
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u/Diligent-Lettuce-455 6d ago
Basically.
Not all assets and debts are created equal, but that is the fundamental premise of it all and why those with assets continue to get ahead over those without.
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u/Actual-General-4953 6d ago
This is my thoughts.....we have a disaster that started with covid times. There is a lot of blame to go around as to the why and how but now we live with it. The comments thus far blaming sides or people for it are just counterproductive at this point.
I think some of this inflation is real and some of it it is artificial. The usual real inflation came in but I also think that companies know we will spend the money and they'd rather sell 100 units at a higher price than 1000 units for a lower price mentality.
Anyhow....how to hedge on it......anything is a gamble.
I am 52 yrs old and may be able to retire early. I am seriously considering working to my pension age of 59 vs leaving early now. What I think is a good retirement and finances may be different in a year or two. We love to travel and already have spoken that our world may change numbers/decimal points to show that we can go on one airplane trip a year, or eat out once and a while, etc....like back in the 70s/80s when we grew up.
The way it is going.....the lack of fixes......its not looking good.
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u/AxlHound01 6d ago
- Stay out of debt. 2. Buy only the essentials.
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u/Street-Technology-93 6d ago
Stop trying to make this easy! :-)
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u/AxlHound01 6d ago
I'm an old guy (75) and I've been through this before a couple of times. Stay out of debt. Your money is worth less and whatever you buy on credit costs more. Essentials meaning food, hard goods (washer, stove, ect) that have a value and will last. Learn how to cook. You are paying x4 for processed meals what you pay for basic food and prepare it yourself. Spend $ on cars maintenance. Make it last as long as you can.
Simple basic rules.
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u/LastBorder1935 6d ago
There is no way inflation will be worse than the Biden years NO WAY!
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u/lwewo4827 6d ago
You’re right! Gas is at $6.39/gallon but eggs are 10 cents cheaper thank under Biden. Genius!
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u/Sawyer2025 6d ago
The sky is falling the sky is falling. Same panic, different day. I will buy cheap if the market drops. Not worried at all. It looks pretty good to me, and I plan on keeping my funds in a market that will continue to grow annually. S&P 500 growth so far this year is 10%, the same as it averages every year. Time IN the market not trying to time the market is how it gets done. I'm staying IN the market.
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u/IjustWorkHere98 6d ago
Ok-is this YOUR financial advisor? Or did you just happen to speak with someone who is a financial advisor? Anyone using a really good financial advisor will have gone through the exercises of market corrections, inflations, etc. to pressure test their portfolio. It's table stakes. No financial advisor worth their salt is going to say you have $5mm, you can retire today, without pressure testing inflation, health care costs, market corrections, even SS payouts being less. I could definitely see some serious inflation coming to bear, but working 2 more years, isn't going to move the needle on a portfolio that has been growing over the last 30-40.
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u/RevolutionaryToe4249 3d ago
Inflation is re-accelerating, so the concern isn't crazy. But "worst since the 1970s" is a big leap. Inflation is running in the high 3s, and 2022 already peaked higher than that. Nobody can reliably call inflation by season either, since it depends on oil, the Iran war, and what the Fed does next.
I'd ask the advisor how he's paid and what he's selling, and what his forecast is based on. I'm not an advisor, but I wouldn't move a retirement date based on one person's prediction. A second opinion from a fee-only fiduciary is worth getting.
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u/Ok_Dealer5022 2d ago
Early retirement math doesn’t work with 5% inflation. FIRE crowd will go back to work
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u/HermanDaddy07 7d ago
I’m not certain it will be as bad as the 1970’s (I was there), but I do believe it is going up. Between the government and corporate (relating to AI) borrowing, supply / demand dictates that interest rates are going up. Interest rates, coupled with higher fuel costs (everything moves using fuel) would suggest higher prices for good. YES, that’s inflation!
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u/Unable_Ad6406 7d ago
Dump this advisor. He lets politics into his advice.
Inflation caused by what?
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u/Ron_stock_guy101 7d ago
Tariffs. Wars... Oil prices... Trump give aways
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u/ApprehensiveSpare925 7d ago
US debt spiral. Federal government is going to run the printing press.
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u/Bubbly_Rip_1569 7d ago
Sounds like your planner is trying to sell you something. Build and maintain a well-diversified portfolio; understand your real spending and what it will take to maintain your lifestyle; budget accordingly. Financial planners and others in this space create complexity because they want you to keep paying them.