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Dear Client,
As Spring draws to a close and we begin to experience the normalcy of graduations again, our enthusiasm for Summer fun grows daily. While growth in all areas is good, except probably our waistlines, an area where growth can be a concern is inflation. Over the past few months, the stock markets have been reacting to back and forth debates by investors about the presence of inflation and what the Federal Reserve Board will do about it. This month, I provide some articles specifically discussing inflation and to help you keep a keen eye on life after working.
Thank you for reading these writings each month and providing your comments, thoughts, and questions, which continue to educate and inform me. I look forward to your continuing thoughts.
Walid L. Petiri
Chief Strategist
Financial Management Strategies, LLC
1330 Smith Avenue. Suite 7
Baltimore, MD 21209
(p) 410-779-1276
(f) 410-779-1302
Inflation can be a scary word for people who are retired. It’s code for “prices are going up, but my income may stay the same.”
The most recent reading on consumer prices put inflation back into the conversation. The Consumer Price Index (CPI) rose 0.8% in April 2021 and jumped by a greater-than-expected 4.2% year-over-year.¹
April’s increase was led by a 10% increase in used cars, with additional pockets of increases, notably in transportation services and commodities. Core inflation, which excludes the more volatile food and energy prices, was up a more modest 3.0% from April 2020.² ³
While there is good reason to be concerned about inflation, there also are compelling reasons to adopt a wait-and-see approach.
Federal Reserve Chair Jerome Powell says today’s inflation will be transitory and attributed to the post-pandemic economic expansion. But others are not so certain. Warren Buffett has said price increases are more structural, meaning they are becoming part of the prices we pay every day.⁴ ⁵
Inflation is just one factor considered when creating a portfolio. If inflation starts to trend higher than expected for a period of time, adjustments can be made. For example, if the Fed chooses to raise interest rates to help manage inflation, it may be appropriate to review a portfolio’s bond holdings. Longer-term bonds can be more sensitive to interest rate changes.
We are keeping an eye on inflation and understand the concerns of our retired, or soon to be retired, clients. We work with professionals who monitor the economy and who can help interpret the recent government reports. But if inflation is starting to worry you, please reach out. We’d welcome the chance to hear your thoughts.
¹ CNBC, May 12, 2021
² U.S. Bureau of Labor Statistics, May 12, 2021
³ U.S. Bureau of Labor Statistics, May 12, 2021
⁴ CNBC.com, May 3, 2021
⁵ CNBC.com, April 28, 2021
The market value of a bond will fluctuate with changes in interest rates. As rates rise, the value of existing bonds typically falls. If an investor sells a bond before maturity, it may be worth more or less than the initial purchase price. By holding a bond to maturity, an investor will receive the interest payments due plus your original principal, barring default by the issuer. Investments seeking to achieve higher yields also involve a higher degree of risk.
The content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. Please consult legal or tax professionals for specific information regarding your individual situation. This material was developed and produced by FMG Suite to provide information on a topic that may be of interest. FMG Suite, LLC, is not affiliated with the named representative, broker-dealer, state- or SEC-registered investment advisory firm. The opinions expressed and material provided are for general information and should not be considered a solicitation for the purchase or sale of any security.
That's perhaps the most critical question to ask people who are currently retired. Was your retirement what you expected, or was it something else?
For more than 30 years, the Employee Benefit Research Institute (EBRI) has conducted the Retirement Confidence Survey, which gauges the views and attitudes of working-age and retired Americans regarding retirement and their preparations for retirement.¹
Part of the survey takes a deep dive into workers' expectations for sources of income in retirement versus retirees' actual income sources.
Here's a couple of highlights of the 2021 survey:
- Only 33% of workers expect Social Security to be a significant source of retirement income. In reality, 62% of retirees say it's a major source.
- Further, more than 50% of workers believe that workplace retirement savings plans will be a significant source of retirement income. But the 2021 survey found that workplace plans are a major source for only 20% of retirees.
- Surprised? We're not. These numbers are consistent year after year. Here's another nugget to consider: 26% of workers plan to work for pay in retirement. In reality, only 7% of retirees do.
- For most, retirement is the "next chapter" in life. It's critical that your finances support your retirement vision, so there are no surprises when it's your turn.
Let us know if there's a change in your retirement dream. We'd welcome the chance to hear what prompted the difference, and we'll be sure to make any needed adjustments in your financial strategy.
¹ Employee Benefit Research Institute, 2021 Retirement Confidence Survey
Investing involves risks, and investment decisions should be based on your own goals, time horizon, and risk tolerance. The return and principal value of investments will fluctuate as market conditions change. When sold, investments may be worth more or less than their original cost.
The content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. Please consult legal or tax professionals for specific information regarding your individual situation. This material was developed and produced by FMG Suite to provide information on a topic that may be of interest. FMG Suite, LLC, is not affiliated with the named representative, broker-dealer, state- or SEC-registered investment advisory firm. The opinions expressed and material provided are for general information and should not be considered a solicitation for the purchase or sale of any security.
18 Years’ Worth of Days
The average retirement lasts for 18 years, with many lasting even longer. Will you fill your post-retirement days with purpose? Click the video below for more info.
Walid Petiri is the owner of Financial Management Strategies, LLC (FMS), a Registered Investment Advisor established in 2000. He has over two decades of financial experience that covers virtually all areas of finance, from tax, insurance, stockbroker, personal financial planning, and personal banking to corporate credit, business planning, and consumer lending. In 2017 FMS Institutional Services was launched, and he leads the institutional consulting services delivered that include; investment policy preparation, asset allocation, manager search, due diligence and selection, and the design and implementation of diverse and emerging manager programs.
He is a graduate of New Jersey’s Montclair State University with a degree in both business management and finance. Mr. Petiri is a recipient of the Accredited Asset Management Specialist designation from the College of Financial Planning in Denver, Colorado.
Mr. Petiri has frequently been heard on WEAA (88.9 FM) as a financial commentator, who appeared on WMAR-TV 2 regarding the 2008 & 2009 economic downturn. Mr. Petiri has been interviewed and quoted by CNBC, the Investment News magazine, and Bankrate.com, written for the Journal of Personal Finance, The Register, Popular Finance (of China), Minority Enterprise Advocate Magazine, The Wall Street Journal, Aging News Alert, Morningstar.com, USAToday.com, TheStreet.com, Wall Street CheatSheet and publishes a monthly financial advice column called the Foresight.
Walid was featured in SmartCEO Magazine - Baltimore for the 2012 Top Money Managers Wealth Management. A member of Bethel African Methodist Episcopal Church, he is a devoted parent to his son and daughter. Walid serves on the Finance Committee of Associated Black Charities, and the Board of Directors for the Reginald F. Lewis Museum and has Chaired the Investment Committee.
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