Aim To Protect Your Retirement Against Inflation

Unfortunately, we’re still seeing the impact of record-high inflation in today’s market. As interest rates may not decline as rapidly as anticipated, retirees face the additional challenge of market volatility impacting withdrawals from IRAs, 401(k)s, Roth IRAs, and other brokerage accounts. So, what are some ways to combat this?

Join us as we share some practical tips for aiming to protect your retirement against inflation.
 
Here’s some of what we discuss in this episode:

• The current economic landscape + Federal Reserve Chair’s perspective 
• Increasing fixed-income securities in your portfolio + Diversifying income sources
• Investing in inflation-protected securities or real estate 
• Adjusting your withdrawal strategies + Exploring high-yield saving accounts

WAYS TO CONNECT:

Book a 15-minute discovery call with the team here: https://calendly.com/rachel-bwg

Visit https://bulmanwealth.com/marcos-lemus to learn more about Marcos Lemus and the other members of the team.

If you have any questions about what we discussed or anything else in your financial plan, email us at [e-mail]. You can also reach the team by phone at [phone].

Episode Transcript

Speaker 1 (00:02):
Market volatility, the dreaded I word inflation and
the Federal Reserve.
How does it affect you ifyou're retired?
What options do you have tomake sure inflation doesn't hurt
your retirement accounts andyour retirement plan?
In today's episode, we'll coverall of this and some moves you
can make to mitigate the effectsof inflation on your accounts.

Speaker 2 (00:28):
Welcome, you are listening to the Buhman Wealth
Group's Financial Compasspodcast, a show dedicated to
helping you successfullynavigate to and through your
retirement.
Our financial compass processgoes beyond traditional holistic
financial planning.
We care as much about you andyour lifestyle as we do about

(00:48):
your plan.
Our hosts are Buhman WealthGroup financial advisors who,
for more than two decades, haveprovided financial leadership
for those they serve.

Speaker 1 (00:58):
Hello, this is Marcos Lemus.
I'm a financial advisor atBuhman Wealth Group in Roseville
, california, and you'relistening to your Financial
Compass.
I want to thank all of ourlisteners.
If you are a first-timelistener, I want to thank you
for tuning in.
If you've listened to ourpodcast before, welcome back.
We do appreciate all thesupport.
So, really, if anything sticksout to you and anything

(01:22):
resonates with you, or you'vegot comments, questions or just
some feedback, please feelwelcome to reach out to us.
The best way to reach us is atour email address.
That email address isaskatBuhlmanWealthcom.
That's A-S-K atBuhlmanWealthcom.

(01:43):
So every episode we focus onvarious topics, specific
questions in the financial realmthat a lot of people share, and
we drill down on a specifictopic each episode.
So today's episode is going torevolve around the volatility in
the markets, inflation thatcrazy eye word that became a

(02:04):
household term a couple yearsago and it's kind of stuck
around for a while and theFederal Reserve, otherwise known
as the Fed for short.
So that word inflationthroughout 2022 and beyond, as I
said, has become kind of ahousehold word.
I mean, it's always been there,but it's really in our face now

(02:24):
.
We're still seeing much of thatrecord high inflation in
today's markets and it may seemlike it's here to stay for a
while, at least in the shortterm.
So how can we begin to navigatethis new environment that we
find ourselves in, and how doesit affect our retirement plans?
We're going to cover this a bittoday, so let's jump right in

(02:48):
the Federal Reserve chair.
His name is Jerome Powell, andhe has said that he doesn't
predict or believe that arecession is on the horizon.
But despite him saying that,inflation certainly seems to be
a little stickier than they'dinitially anticipated, the
thought was a couple years ago,starting 2022, portion of 2021,

(03:11):
was that you'd hear that termtransitory Inflation is
transitory.
It's not here to stay, it'sjust temporary, and we know now
that that's not the case.
So what does this mean?
It could mean the interestrates will stay likely where
they are or maybe come down alittle slower than we'd

(03:31):
initially thought or hoped.
So why does this matter?
Well, it matters to all of us,but really, for retirees
specifically, your marketexposed accounts may be
providing you with some muchneeded income, maybe to
supplement Social Security orpension or other income streams.
Market volatility can turn thatincome into a question mark,

(03:57):
and so now, at the state of themarket at the time that we
retire is really out of ourcontrol.
We can't choose how themarket's going to be when we
retire that's out of our control.
But what is in our control ishaving a plan to mitigate the
risk and to protect what you'veworked so hard to earn during
your working years.

(04:18):
So, with higher interest ratesor rates just coming down slower
than we thought, what does allthat mean?
Well, high rates could meanmore market volatility or even
downturns in the market, whichcan directly affect those market
exposed accounts like your IRAs, 401ks, roth IRAs or other

(04:39):
brokerage accounts.
If we're relying on those forincome, they're invested in the
market.
High rates and volatile stockmarket can certainly affect our
withdrawals that we're relyingon no-transcript.

(05:00):
But recession remains apossibility if the current
market and inflation conditionsstay the same and the Fed is
forced to keep those rates high.
It's a careful balance oftrying to mitigate inflation by
raising rates but not droppingthem back too soon or too fast,
and so that's kind of theconundrum that the Federal

(05:23):
Reserve is in right now.
So what are some things that wecan do in a higher interest
rate environment to be aware ofsome of these factors and in
some cases even take advantageof higher rates.
Right, higher rates aregenerally not a fun thing if
we're borrowers or we'reborrowing money taking out a
loan, but on the flip side, howdo we take advantage of that?

(05:43):
So the first thing, some thingsthat we can kind of be
cognizant of, are maybe justincreasing our fixed income
securities in our portfolio.
So retirees generally have ahigher allocation, a higher
percentage of fixed incomesecurities once they retire.
Things like bonds, things toprovide a steady income in a

(06:07):
rising interest rate environmentmight be prudent for retirees
to consider gradually increasingtheir interest rate and then
gradually increasing those bondallocations, the bond
percentages, maybe with shortermaturities, shorter term bonds
that could provide some betteryields as the interest rates
continue to increase or at leaststay the same.

(06:28):
Another option is diversifyingincome sources.
So if you are retired, you canlook to diversify some of the
sources that you rely on forincome.
You know, maybe this is acombination of fixed income
investments like bonds or somedividend paying stocks, or even

(06:48):
something like a REIT, a realestate investment trust, even an
annuity that can guarantee anincome stream for life, and
we'll come back to these, comeback to the annuities.
So another thing is maybe toconsider some inflation
protection right.
Inflation one of the things itdoes is it erodes our purchasing

(07:08):
power over time, especially forthose that are retired and
living on a fixed income.
So retirees can considerinvesting in inflation protected
securities like TIPS and TIPSis an acronym that stands for
Treasury, inflation ProtectedSecurities.
It does just that, so its solejob is to essentially retain

(07:30):
purchasing power despite anyinflation on the back end.
So another thing you can do islook into something like real
estate that actually tends toperform pretty well during high
inflationary periods.
So circling back quickly toannuities, annuities can be
something to look at, maybe anannuity with an increasing

(07:51):
payout.
Some annuities do offer payoutsthat increase over time or are
tied to inflation.
So if you find yourself retired, you could consider an annuity
with an inflation-adjustedpayout.
That might help mitigate someof the effects of these higher
interest rates and inflation asa whole.

(08:12):
Another thing is just to lookat withdrawal strategy.
So maybe getting a littlecreative and dynamic with your
withdrawal strategy from yourretirement accounts so you can
look to adjust right In periodsof rising interest rates.
Maybe it's worth looking atdialing back some of your

(08:32):
withdrawals and lowering thepercentage to allow those
portfolio accounts to grow andappreciate again by dialing up a
different income stream.
Lastly, here's one of the thingswhere we can kind of take
advantage of the high interestrates.
I mean, usually it's not agreat thing, right, as I said,
if we're a borrower it's not agreat thing, but on the flip

(08:52):
side, if we can take advantageof that in a positive way for us
, we should, while the interestrates are the way they are
currently.
So if you have extra cash onthe sidelines, maybe something
you've kept for an emergencyfund or just in savings and it's
earning pennies in interest,look at something called a high
yield savings account.

(09:13):
Now, you can't find them atevery bank, but it's worth
looking into.
So that acronym H-Y-S-A or highyield savings account, and it
does exactly what it sounds like.
Some of these are offeringupwards of four and a half to 5%
, maybe even a little more, ininterest for money that's
otherwise just sitting insavings.

(09:34):
So this is a way we can let thehigh interest rate environment
work for us as opposed toagainst us.
So, coming back to annuitiesagain, this can be a great
option for a portion ofsomeone's portfolio.
You know an annuity, especiallyone with an income rider, can,
as I said, create a stream ofincome very similar to a pension

(09:57):
or social security that willcontinue to pay you for the rest
of your life, even after thataccount value has been depleted
via withdrawals down to zero.
So this can be a powerful toolfor those who don't want to be
subject to the market turbulenceand volatility and uncertainty
when it comes to drawing down onyour IRS or other retirement

(10:20):
accounts.
If you're not familiar with howthese types of annuities work,
I encourage you to speak withyour financial advisor and ask
them about these.
See if it makes sense in yourspecific plan, in your scenario.
Now, it isn't always a fit insomebody's plan, but I'd argue
it always makes sense to atleast explore that as an option

(10:44):
and see how it can benefit youand if it makes sense or not.
So this is really just the tipof the iceberg when it comes to
different ways to deal withthese crazy inflationary periods
that we're seeing now.
And you know I'll say thisisn't the first time that we've
seen this right and it likelywon't be the last.
But it is important to have aplan that can weather any storm,

(11:06):
any market or interest rateenvironment that we come across
in our retired years, and theseare the years we want to, like I
said, maintain that purchasingpower and make sure that these
accounts are sustained over along period of time while we're
no longer working.
So there's always a way toprepare and a way to at least

(11:27):
mitigate the risk and exposureto these types of things.
So I encourage you, you know,talk to your financial advisor
or financial professional andensure that you have a
diversified plan in place toweather these storms so that
your income can be as secure asit possibly can be in retirement
.
Again, if anything you heardhere resonated with you today,

(11:51):
you have comments, questions oryou just want to dive deeper
into your particular situation.
Please, I welcome you.
Shoot us an email.
The email address, again, isask at bullmanwealthcom.
I want to thank you guys allfor tuning in and listening.
Whether you're coming fromApple Podcasts or Spotify or any
other podcast platform, we doappreciate you taking the time

(12:14):
to join us and listen in.
We really greatly appreciateyour reviews, your feedback and
your time.
So we'll see you guys next time.
Join us on your financialcompass.
We'll catch you in the nextepisode.
This has been your host, markosLemus with the Bollman Wealth
Group, take care.

Speaker 2 (12:39):
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(13:00):
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