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Market Volatility, Inflation, Social Security & The Benefits of Taking a Walk – Finger Financial Five #80

This too shall pass.

When things are bad, remember: 

It won’t always be this way.

When things are good, remember:

It won’t always be this way.

Enjoy every great moment.”

– Paraphrased from the Bible

I was an active child. Spent most of my time outside playing in the woods. Inevitably, I would get banged up and need to get stitches. Good thing my dad was a M.D. and could stitch me up.

I would ask him, is this going to hurt? I cannot remember the words he used, but can remember the way he looked at me and how it made me feel.  It felt like the truth. Knowing there would be pain, but that it’s part of getting better.

That is where I believe we are financially. There will be some pain, but it’s part of getting better. 

The government produced plenty of money to support us through the pandemic. This comes with some consequences: namely inflation

As you see in the chart below, cash is a loser to inflation. But cash is a needed cushion for retirees’ unexpected expenses. There is pain because cash loses to inflation, but the pain is necessary.  Trick is to have enough, but not too much. For most retirees, I recommend having at least 1 year of living expenses; for those who are still working, 6 months is adequate. 

As you see in the chart above, the markets are down for the year. You can also see that, for the most part, markets trend upward even though they may be down at various points in time.

My dad would say the same thing about bumps, bruises, or stitches as I am saying to you about investing: “there will be some pain” — “give it time.” 

Make sure your plan is up to date and stick with it. If you have questions or concerns, please let me know. You can email me at [email protected] or click here for phone appointment. 

Focus on things you can control. Here is a list.

Important refresher on Social Security and Living Your Best Life:

A very important decision for a retiree is when you claim Social Security. And it is 100% within your control, unlike the financial markets. Social Security can be tremendously beneficial for retirees for three main reasons. 

First, its value rises in low interest rate environments. For example, if you were to get $3,000/mo or $36,000 a year you may need $1,800,000 at 2% to yield the same income or $900,000 at 4% income. 

Second, in periods of high interest rate or high inflation, you may get a Cost of Living Adjustment (COLA) or pay increase to offset rising prices. For 2022, Social Security went up by 5.9% and may go up by 7.6% next year. You do NOT have to claim your benefit to get these increases. If you are delaying your benefit, you will get these benefits when you claim later. 

Third, Social Security becomes more valuable the longer you live. This provides literally an income you cannot outlive. 

Read more about the benefits and strategies around Social Security click here and here

Happiness, what does that mean to you? I love Naval Ravikant’s definition: “Happiness is a state when you realize nothing is missing.”

Great read from Chris Arnade, who would walk New York City and other places. He said, “I don’t think you can know a place unless you walk it, because it isn’t about distance, but about content.” This applies to life, too, don’t you think?  My two big takeaways were, even drastically different cultures are way more alike than they are different and there is so much life to be seen, if we slow down enough to see it. 

One the lighter side, Elliott and the Myrtle Beach Seahawk Tennis team won the third round of playoffs Monday 6-0. They play a tough team from Beauford, SC Wednesday for the Lower State title. If they win, fingers crossed, the finals are in Florence, SC. Saturday 7th.  

Hope all is well with you and your family,

Jeremy 

Finger Financial Five – 5 points in 5 minutes or less – is to provide you with a weekly shot of useful financial information.  My intention is to share principles, so that you will have more clarity and peace, that help you make better financial decisions.

Investment advice offered through Stratos Wealth Advisors, LLC, a registered investment advisor; DBA Riverbend Wealth Management.

This content is developed from sources believed to be providing accurate information and provided by Riverbend Wealth Management. The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. Stratos Wealth Partners and its affiliates do not provide tax, legal or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors before engaging in any transaction.

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