PODCAST 79: How Will Inflation Affect Your Retirement Plan?

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Below is a transcription of the Ask Gregory Podcast 79 – How Will Inflation Affect Your Retirement Plan?

Hey welcome. I’m your host Gregory Ricks a financial advisor here to answer your questions and help you win with your money.

On today’s episode of the Ask Gregory Podcast, Gregory is joined by Brandon Blanchard, a wealth advisor here at Gregory Ricks & Associates The Total Wealth Authority. On this week’s episode, Gregory and Brandon are going to discuss some different moves you can make to help navigate this inflation. Also, we have a complimentary download waiting for you on this topic. If you go to gregoryricks.com/podcast79. Again, that is gregoryricks.com/podcst79

Talk about inflation for a moment, been seeing it been feeling it? You know, the gas pump, I think is one of the biggest reasons for that. But supply chain problems is part of a cause of that. More money to spend on things also, you know, the increase in the supply of money as well. Is part of that cause out there? Now, annual inflation, annual inflation exceeded 7% in 21, separate years of the past 170 years. So, do you think we should be really worried about that just repeating itself and in to keep going inflation last year was 1.4%. And of the 2010s, that decade had averaged about 1.8%? There? So in my mind how I think of this is yeah, I think inflation is catching up. So we do have this period come around every so often. And what was the last time 40 years ago,

I think we just kind of got spoiled with these last few years of under-average inflation, where people are getting a little bit of sticker shock, like you said, we’re catching up now. And the future outlook is probably not as bad as it is to end today. But it’s still probably going to be higher than we’ve gotten used to.

And that’s an important reason, you know, people, you know, one of the concerns sheets that was asked the other day is what do we do about inflation? Well, you shouldn’t have your money sitting in cash out of fear. That’s why we talk about diversification. And I talk about diversification and asset classes when I mentioned earlier that we should, you know, I like using some I like using stocks through exchange-traded funds, the indices if you can’t beat them, join them. And then I liked me some bonds in the mix. I liked me some quantitative tactical where money is following the momentum. And I like index-linked where an insurance company takes the risk off and I get a portion of the upside of the market and have no downside. So what we have is an increased opportunity for our money moving forward when you look at how things cycle in the markets not going to win every year. And 2022 might possibly be a down year, because of interest rates going up.

You know, I keep hearing them say whether you know the Feds gonna raise it four times this year? Well, they’re under pressure to do so. And I’ll tell you last year, early last year, I will say well, you know, we’re not getting interest rate increases until after the midterms. Now, with that said, are we going to see four rate increases before them? No, I don’t think so. We could see a split where they hit us with two and two, after all, that could possibly happen maybe three before and one after. But we’ve got some increase coming which could possibly impact the market. But you’re going to see some volatility, and that’s kind of the norm or the markets pulled back.

So we keep seeing it move up and then pull back. And there are concerns out there and we’ve had a really nice Ron the past few years, but what you should think about is how are you diversified, and most of the wealth in this country is set in 401 ks Do we have a plan that could help people improve their decision making on and I’m passing this to Brandon Michael is here in the studio with me he’s one of the Wealth Advisors on my team at Gregory Rick’s and Associates. So I just thought maybe we should share with him because people Have these worries and a lot of times, oh, 401 K’s you know, they just like ask somebody what they think they should do and they put their money in it and it stays that way they can go for the government thrift plans as well.

Yeah, man, I can’t tell you how many times we talk to people and ask them, okay, you have your 401 K there, that’s the bulk of your retirement savings. What does that invest in? Let’s say, oh, whatever I initially selected 30 years ago, when I got enrolled in the plan, in that just kind of a set it and forget it, kind of check the box and forget exactly out of sight out of mind, which is one of the good factors of a 401 K, but can also be one of the downsides if you don’t manage it, right.

So we do have that 401k Maximizer program, kind of a downside of 401 K’s is that, yes, we can invest them. But we don’t have the flexibility that we have on say, your typical investment brokerage account or an IRA, you have to stay within whatever lines your company really draws for you. Say if you’re for if your company uses a specific 401k provider, they’re going to have their own list of funds that you can choose from, you can’t go out and buy whatever stock or whatever ETF you want, again, you have to stay within the lines that they draw for you. So with that 401k maximize the program, we just help people get a little bit more insight on okay, this is what I have available to me, what are the best combination of options that I should click going forward, just to give you a little bit better chance of growing with the market and hopefully, help you avoid that set it and forget it mentality.

I like that. But you know, once again, having an advisor help and gives some insights into what’s going on. And one of the things we’re people kind of focus on just the investment portion of, of what we do from an advisory standpoint. And the thing, I always kind of say, we do so much more than that. And that’s to even have an understanding of the impact of inflation, the impact of interest rates going up. And if you’re worried about that, let’s talk about it. Through that, you know, when we, you know, looked at the past 71 years, and we had 15 one-year periods of inflation at more than 7%. No, I’m not 7%, the 15 highest years of inflation over the past over fit over the past 71 years, looking at the 15 highest years, I believe you had the market up seven of those years and down eight years. And if you took an average of market returns, it averaged about two and a half percent over those 15 highest inflation years.

And so once again, inflation is not devastating. But that’s kind of looking at it just from a stock market standpoint. And that’s one reason we should look at asset classes. And you should look at rebalancing. And I think it’s another area where people get out of whack. Even if they’re running their own portfolios, they don’t necessarily realize that you should shift some games in 401 Ks, they can get really out of whack over years of not making adjustments there as well.

Yeah, I keep on going back to that term, set it and forget it. And using your example, if you set those initial allocations in even if it’s a good diverse allocation on the start point if one of those pieces of the portfolio does a whole lot better than the other. Now your entire structure is out of balance. Now you’re overweighted in maybe one individual asset class or one individual fund, and you need to make some tweaks to account for what is coming and stop thinking about what has already happened.

But if you’re looking for some help and say, Hey, I don’t want to call the radio show, but I want to call the office. Here’s the office number (504) 832-9200. You can just set up a phone call. You can call to ask a question. You don’t have to become a client to get an answer the question, but you can start by having a 15-minute conversation set up a video meeting if you’re not in the Baton Rouge area, mastery area, Mandeville area, or Gulfport area where our actual four offices are but just start with a conversation call my office 504832 9200 Go to Gregory Rick’s dot com.

Thanks again, everyone for tuning in to this week’s episode of the Ask Gregory Podcast. We’d love to give a big thank you to our guests Brandon Blanchard for joining us on this week’s episode. And don’t forget we’ve got a complimentary download waiting for you on this topic. If you go to gregoryricks.com/podcast79 Again that is gregoryricks.com/podcast79

Yeah, if you need help on something like investment planning, estate planning, you know the guided planning system that we lose income planning, just start with a 15-minute conversation (504) 832-9200

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