Post-Retirement Income Strategies During High Inflation
Inflation isn’t showing any signs of decreasing in the financial quarters ahead. If the pandemic rages on with new variants of COVID-19, the federal government may be tempted to print additional economic stimulus checks, adding to inflationary woes all the more. Full-cycle investing that accounts for economic conditions including inflation, stagflation, reflation, and even potential deflation is essential to safeguarding your nest egg during retirement.
Our investment advisors in Canton, Ohio are here to strategically develop a full-cycle investing plan custom-tailored to your unique financial situation and goals.
Let’s take a look at some income strategies that will help you remain financially comfortable after retirement even if inflation continues for the foreseeable future.
Establish the Right Mix of Stocks and Equities
Inflation is financially destructive in the sense that it devalues your savings yet it is somewhat of a boon for stocks, mutual funds, exchange-traded-funds (ETFs), and other investment securities. The devaluation of money has the potential to heighten corporate revenue and steer that much more money into stocks, ultimately increasing shareholder value. A financial advisor can help you establish the right mix of stocks, ETFs, mutual funds, and other securities with inflation and other economic factors in mind.
The financial experts at Mcgervey Wealth Management keep our fingers on the economy’s pulse as well as that of the stock market to help investors like you carefully manage risk. Our guidance will strategically shift your money to the appropriate asset sectors and classes as the dynamics of the global economy play out. The right investing strategy offsets the devaluation of your financial nest egg through gains that outpace the rate of inflation.
Instead of poring over the seemingly endless investment-related content on the web and at local libraries, let us sort through all the data and economic news on your behalf. We will strategically adjust your investment mix in response to inflation as well as domestic and global economic conditions to help you outpace value lost amidst ongoing inflation.
Consider the Merits of Investing in Real Estate
Real estate tends to appreciate as time progresses. The increase in domestic population here in the United States combined with a finite amount of land to build upon is largely responsible for the ever-increasing cost of real estate. Invest in both residential and commercial real estate today and those properties will likely increase in value over time as inflation devalues money all the more.
There is a good argument to be made that inflation is a boon to real estate investments as it increases the price of homes, commercial buildings, and land. Though there is the potential for the pendulum to swing back the other way, potentially with a real estate bubble burst, the federal government is unlikely to allow such a scenario to unfold after the Great Recession of 2007 that was primarily caused by the real estate market’s subprime mortgage fiasco. Invest in real estate, use it as a stream of income or simply re-sell it after several years, and your money will likely grow much more than the rate of potential devaluation caused by inflation.
Redirect Social Security Income to Investments
Though Social Security payments are adjusted for inflation through the cost-of-living (COLA) adjustment, there is the potential for inflation to increase so fast and so sharply that your Social Security payments no longer suffice. Don’t lose sight of the fact that the cost of healthcare services is rapidly increasing with each passing year. Even if Social Security beneficiaries are provided with a COLA increase of 2% to 3% or higher in the years ahead, it probably won’t fully offset the rate of inflation.
Investment advisors can construct investment portfolios designed to mitigate the deleterious impact of inflation while simultaneously mitigating risk. Though some risk is necessary in the context of potential investment growth, a portfolio characterized by an abundance of risk is not in your financial interest once you reach your golden years.
Address Fixed-Income Sources in the Context of Moderate Inflation
Though hyperinflation is unlikely to occur in the ensuing years or decades, moderate inflation might whittle away at your hard-earned money for several years or even longer. If you have a pension, Social Security payments, or money parked in conservative investments such as CDs, savings accounts, and money market accounts, now is the time to address them.
Though you can’t change your monthly pension or Social Security payment, you can shift money out of CDs, money market accounts, bonds, and banks savings accounts to other investment vehicles with a potentially higher rate of return.
A fee-only fiduciary financial advisor can provide unbiased counsel and help you redirect your savings and investment dollars into dividend-paying stocks, mutual funds, ETFs, and individual stocks with growth potential. Certain types of bonds such as the federal government’s treasury inflation-protected securities are designed to keep pace with inflation, ultimately providing you with an insurance policy against potential runaway inflation for the life of the bond. Each of these unique investment vehicles can help you offset the loss of your investing dollars resulting from inflation through the remainder of 2021, into 2022, and beyond.
Schedule a consultation with a McGervey Wealth Management investment advisor for comprehensive financial planning today and get the ball rolling on your personalized full-cycle investment strategy.
At McGervey Wealth Management, we get to know you on a personal level and keep things simple, using common language everyone can understand. To learn more about our full-cycle portfolio management techniques and how higher inflation might affect your retirement planning contact us today.