Guarding Your Nest Egg

August 20, 2022

Kristen: When we have questions about what’s happening with all the financial news, our economy, the stock market, inflation interest rates, gosh, you name it. There’s so much to talk about right now, especially midterms and how that’s affecting the financial conversation and the decisions that you make. We will discuss those things along with Mike offering to shed some light on the steps that investors like you closing in on retirement can take to hopefully be less stressed out about exiting the workforce successfully during this overwhelming time, for some, we’ll discuss the latest, what I’m calling “frightening financial facts” in the news. I came up with the name, Mike, not the traditional media, Mike: Frightening financial facts, the FF. That’s what, Kristen: That’s what it feels like every day. There’s like, okay, he signed this in the law triple and then the interest rates, all the things. But most importantly, Mike, you’re going to simplify how people can hopefully avoid feeling is financially overwhelmed as they do right now because there’s a lot of people near or in retirement that know they need to make some decisions, but they’re nervous Mike: To, we call it a analysis paralysis. Have you Kristen: Heard that term? Yeah, that’s true. I never Mike: Thought about it that way. Yeah. It’s just too much information, too many things going on. Let’s just take a break. Yep. Kristen: Taking that break. We understand. However, don’t forget. This affects the rest of your life. If you’ve got questions about your 401k, if Roth, conversion’s a good idea. How to do a rollover. Do you need to do a rollover? How do you draw income on your hard earned savings for retirement Mike and the team of fiduciaries at talent wealth can help you with that. By putting together a true written plan, we call it a complete financial plan. It’s valued at $1,500 and they can start that process. If you give our team a call now and set up a virtual or one-on-one face to face, sit down conversation, all of that at no charge. I love going out, enjoying a nice meal. You know, it’s something now that with inflation, I think twice about, okay, do you really need to treat yourself? Do you, Mike: You can kind of do it again though. You don’t have to like pull your mask down between bites and Kristen: Yeah, it wasn’t because of that, I’m just talking about inflation. You go, well, maybe next week, not this week, but that’s just how frugal people are. And it’s coming through for Applebee’s and IHOP. Surprisingly, they are benefiting from all the belt tightening that’s happening among American consumers sales at both chains, which are owned by a company called dine brands have grown six to 8% among higher earning households. So basically you’re really wealthy neighbor or whoever you think it is, is going to Applebee’s for some rets now because of inflation, Mike: Those baby backs. I, what call Kristen: ‘Em flashing back to the advertisements. I think Chili’s is the baby back ribs also because of Austin Powers. I think I know that they probably don’t even have ’em anymore. Mike: They’re so similar, right? Chili’s an Applebee. Yeah, basically. Which one actually has the baby backs. It’s basically the same. All right. So, so people, even your highfalutin neighbor, maybe cutting back a little bit, even though they have to spend more, isn’t Kristen: That interesting that we’re seeing that behavior just more proof to me that inflation isn’t just painful and irritating for every American at any threshold of income. It’s also quite political. Now with midterm elections right around the corner, president Biden has signed the inflation reduction act into law. The lighthouse says the package address is inflation by lowering energy and healthcare cost for families and will help bring down the deficit. But economists Steven Moore weighed in with Stuart Varney on Fox business about this Speaker 3: Congress increased government spending by 750 billion and they increased taxes in our businesses by roughly the same amount, both work in the direction of increasing inflation. If you increase taxes by 750 billion on our businesses store, many of them are gonna have to raise their prices to be able to afford to pay the taxes. Yes. So all of this gets passed onto the consumer. Yep. Now the good news is it is true. We’ve seen a slight decline in inflation. The July number was pretty good, but don’t forget when you have year over year inflation of eight and a half percent, everybody has different numbers. My numbers, the number that we put together at heritage is that the average family is paying about $4,000 a year or more in real terms. And what that’s doing is shrinking the paycheck of middle class families. So that’s why I call this a middle class recession. Kristen: I think that’s a perfect name. Mike: I agree. 100%. And if you look at these numbers, so we’re seeing the inflation reduction act in motion and we’re hearing what’s gonna happen. And they’re exactly right. I mean, this is just another way to spend more money. And our job at talent wealth is to figure out, well, how is this likely to affect markets moving forward? Typically when the government comes out and, and spends tons and tons of money, it gets pumped into the economy. People go out and spend that money. And then it drives valuations up on companies cuz their sales go up. Now we’ve inherited through all of the spending the situation where now we’ve got crazy high inflation numbers and the feds going back and having to raise rates to try to slow it down. And then on the backside of the fed raising rates to slow it down and, and just like he said, well, we had a pretty good July number so that mm-hmm <affirmative> the Biden administration is bragging that well in July inflation was 0%. Well, no kidding. I mean they, they raised rates and people are cutting back so they didn’t spend as much, but now they’re gonna turn around and pump more money into the economy. Tons of money into the economy. That, by the way, isn’t obviously going to, it’s obvious to me, I hope it’s obvious to our listeners. Why would that reduce inflation? So now the fed has to go back and say, well, we need to bring inflation down, but Biden just signed off on something. That’s going push inflation higher. Can Kristen: I ask a question? Why are we we calling this? Or why did they name it? Excuse me. The inflation reduction act when well it’s inflation isn’t I mean, climate changes in there. I saw a lot about that. Giving the IRS more money. Yeah. Yeah. That’s great. Tax hikes on the terrible people that do well, you know, all that kind of thing. Nothing about inflation. Mike: Yeah. I mean, if you can’t say midterm elections coming up, I know, right? It it’s, it’s all I’ve talked about on the show before. I, I would expect that come mid-November post elections that all this language goes away and they’re gonna say, Hey, look at all the nice things we did for you. And the short term inflation may drop again this month. But in the long term, once this money gets into the economy, it goes back up again. And I think the takeaway is they don’t really care one way or the other. They’re just trying to drive money into the economy. The more money they drive into the economy, the more debt that we have, the more debt that we have, the more dependent we are in the government, it goes on and on and on and on. And just like we were talking about earlier, it’s it’s analysis paralysis, too much information. Our job is to take a look at what is going on. We can’t play this week by week or month by month, but we have to say, what is the overall effect likely to be moving forward with everything that’s happening. And, and frankly, it’s been a little confusing here lately because we had a, a, a good July in the stock market and people are looking at their accounts going well, it was going down and down and down. Mm-Hmm <affirmative> if you’re not working with us, you may have had an advisor that was saying, well, just hang in there. Don’t worry. It’ll come up. And then in July, they’re going, Hey gee, whiz, my advisor might have been right, cuz it’s actually coming up. Well, the thing is just like markets, don’t go straight up. There’s an average of the returns. Moving up markets, don’t go straight down and you can go back to whether it’s just a recession or a market crash or a correction. What have you, as it’s going down, typically mark cooks go down. Then people think, Hey, maybe this is a good point to get back in. Then they go up and then people get nervous down again and it finds a new low. So we want to smooth that out for our clients. And we wanna try to help our listeners smooth all of that out. So if somebody wants to call us up and say, Hey, listen, I’m, I’m just really confident in the economy. And I think spending more money and the inflation reduction act is gonna be long term beneficial and actually bring inflation down. Then by all means, hang in there on your portfolio. But if you think this is potentially bad and you’re sitting there with your investment options that are, are limited in things like retirement plans at work, or you’ve got an advisor saying, Hey, just trust me. And you’re kind of in this hope category. Mm-Hmm <affirmative> hope is not a financial plan. It is not tactical. It is not active management. It’s I just really hope things don’t get really bad. And again, I’m optimistic generally, but I don’t know how, when this economy, when, by the way, all the numbers are coming in bad. We just got housing numbers last week, Kristen, that were bad and not a little bit bad, real bad. Mm-Hmm <affirmative>, that’s where it starts. People aren’t buying anymore. Inventories are going up. Then it sort of starts trickling down to other things. You know, companies Walmart, for example, last week they said, well, Hey, listen, we’ve adjusted our profits down. Companies start adjusting profits down. And now the big thing is if you want to know, well, why was the market up in July? It’s a speculation that because the economy is slowing down, maybe the fed won’t raise rates higher. Well, I don’t know. I mean, they might not, but I don’t know how they don’t raise rates higher. If Biden has just signed in spending more money, cuz he’s gonna add to the inflation problem. So putting all this together, take a close, look at your portfolio, understand how it’s likely to work. Moving forward, whether markets are good or bad. And we would recommend just coming up with a plan that helps you not only protect, but grow your money over time. Kristen: Mike is a fee only fiduciary financial advisor, the founder of talent, wealth. And he and the team of fiduciaries are here to be a resource for you in and near retirement. They can help you take the first step towards that planning a complete financial plan, which is a true written plan for retirement valued at $1,500 complimentary reach out Mike, I’m just trying to process all that you were talking about there. You know, July was pretty good for the market. So a lot of people are feeling that the concern is dissipating. If you will, by talking Mike: About with this thing, okay? Maybe this isn’t so bad. Kristen: We’ve talked about on this show, how you believe we’ve been in a recession for quite some time. Do you believe that tide is changing? Mike: No, I think it continues to get worse. I think we are in a recession. Obviously there are for, and I would say for political reasons, there are those out there in the media and the talking heads, you know, financially type of thing that are saying, well, no, no, no, technically it’s not a recession. Some say it’s technically a recession. Some say it’s not technically a recession because how could we have these jobs numbers? If it was really a recession? I mean, ask yourself this question. Who cares? What my opinion is, whether it’s a recession or not a recession. If half the people think it is one and the other half, think it’s not one. Do you really wanna get caught in the middle? I mean, why pick a side overall markets are pretty good. And even if you didn’t get out before, we’ve had a pretty good bounce, if you didn’t get out, now’s a good time to take a look at what your options are. Our feeling is, and I’m not trying to scare anybody. It gets worse from here. I don’t see good economic data. Everything is slowing down and it’s all hung up on the fed. What is the fed gonna do? Well, what we know is we can’t control the fed. Why try to guess what they’re gonna do if they cut rates or don’t raise rates. Yeah, the market probably goes up until the next terrible thing happens. But if they continue with their process and the market is wrong on the assumption, we’re gonna see markets fall pretty quick. So take a close, look at your portfolio and get an understanding of what’s available to you. Kristen: It sounds like also doing a gut check of have I changed my spending and behavior? I think that’s a good thing to go on too, Mike, because I know all of our listeners have taken a second look at the grocery store. And like we started talking about in the segment, more higher income folks are eating at places that are more frugal seems that we’re all making different decisions with that discretionary income that you talk about. So that’s a good gut check too, to see if it is time for you to sit down with a fiduciary financial advisor and have them give you a second opinion of what’s happening with your money and put together a true plan for your retirement, that deals with these issues and more it’s complimentary. You can also set that up by visiting guarding your nest egg.com. What does the average American think about six times per day? Well, we’ll reveal that and Mike will also bring to light the steps investors closing in on retirement can take to hopefully be less stressed about exiting the workforce successfully. That’s next on guarding your nest egg.