precious metals Archives - The Free Financial Advisor

Inflation is high. We all know that. I’ve been writing about it for months and it appears that it’s here to stay. With all of that said, I saw a question the other day about how to manage the high inflation when you’re in retirement, and I thought it was a good topic to talk about today. So we’re going to discuss high inflation in retirement, how it’s impacting retirees, budgeting strategies, investment strategy changes, and if inflation will be an ongoing concern for retirees.

Inflation right now

It’s high…no surprise to anyone. In January it was 1.4%, in April it was 4.2%, in July it was 5.4%, in October it was 6.8%, and in December it was 5.9%. That’s historically high. The highest it’s been in 40 years. Will that stay, only time will tell and we’ll get into that later.

How is it impacting retirees?

Things are getting expensive, so when you set a budget at the beginning of your retirement you account for the current price of the things you need. You should also account for increased costs of items as time goes on because there can be big or small increases…either way, prices costs will go up.

Groceries and energy are two prime examples of things that have gotten more expensive recently. So when those things went up in price, it probably pinched people’s budgets, and/or pushed forward costs that probably weren’t expected for several years. Odds are, they’re spending more money now on food and energy than they anticipated. Hopefully, people have been able to make adjustments already.

Budgeting Strategies

There really aren’t a lot of tips I can give you. The best thing I can really say is to cut costs where it makes sense to account for things that are now more expensive. The other tip, though this is more of a gamble, is to not make any changes now and make changes in the future when inflation comes down.

Investment Strategies

With your investment, you’ll need to reallocate some assets. I wouldn’t take any money out of stocks. What I would do is take some money out of your bond investments and put it into precious metals. The FED said that they plan on hiking rates three times in 2022. Bond prices will go down when interest rates go up. Increasing your stock allocation or putting some money in precious metals could be a good way to combat inflation.

High inflation here to stay?

No, I do think it will be here until the FED hikes rates, but my reasoning for that has to do with what happened in 2018. If the FED can raise rates without putting a cork in the recovery, then I think there’s a possibility that inflation and the federal funds rate will stay elevated until the bubble pops.

Disclaimer:

**Securities offered through Securities America, Inc., Member FINRA/SIPC. Advisory services offered through Securities America Advisors, Inc. Securities America and its representatives do not provide tax or legal advice; therefore, it is important to coordinate with your tax or legal advisor regarding your specific situation. Please see the website for full disclosures: www.crgfinancialservices.com

Jacob Sensiba

My name is Jacob Sensiba and I am a Financial Advisor. My areas of expertise include, but are not limited to, retirement planning, budgets, and wealth management. Please feel free to contact me at: jacob@crgfinancialservices.com

www.crgfinancialservices.com/

High Liquidity

For an investment asset, it is highly liquid, possibly second only to cash. No commodity, besides maybe silver, enjoys the liquidity of gold. One of the problems with over-exposure to stocks or real estate is trying to sell it. If the market is bad, you may have to wait a long time to sell or you may be forced to sell at a steep loss. By comparison, gold is as close to money as you can get without taking on the risk of paper currency. There’s always a market for bullion.

Low-Risk Funds

The closer you get to retirement, the lower your risk tolerance. Stocks are some of the highest-risk investments you can get. They provide the highest growth rates, but could correct or crash at any time. When you want to retire, you need your assets to be worth what you were planning them to be worth. Gold provides stability of value, allowing you to draw on your assets when you need them.

Protect Against Inflation

If low-risk and high liquidity are important, why not keep your retirement savings in cash? Inflation will erode the purchasing power of your savings. Your retirement could last 20-30 years or even longer. At an average 2% inflation per year, your savings would lose 54% of their purchasing power over 20 years.

Gold prices rise against inflation. Investors regularly use the metal to avoid the erosion of value of paper currency, without taking on the risks of the stock market.

Leave an Inheritance

Many parents don’t just want to retire comfortably, they also want to leave something to their children and grandchildren. An inheritance may not be something you want to risk on the stock markets or committed in bonds, especially since they will have to pay an inheritance tax, even if you bought the investments as part of a retirement savings plan.

Leaving gold coins allows your family to decide what’s best for them. When you inherit gold, you may want to keep it or sell it, depending on whether you:

Already have retirement savings and want to keep bullion

Want to re-invest the money in stocks and more diverse investments

Use the proceeds to become debt-free

Use the proceeds to create an emergency fund

Gold coins and bars can help you retire comfortably and confidently. Prepare today with bullion investments.

Managing High Inflation in Retirement