Social Security COLAs Not Enough? Here's what to do. Ep. 113 Artwork

Excel in Retirement

Where financial planning becomes understandable. David brings interesting stories each week to listeners of his Excel in Retirement show along with actionable ideas that may help listeners avoid pitfalls that many people face in their retirement. David C. Treece began his career in the financial services industry in 2011. He is an independent financial adviser. He has passed the Series 65 securities exam, and he is health and life insurance licensed in several states. David’s financial advisory firm focuses on retirement income planning.David worked for two other financial advisors before founding his firm in 2018. David launched Clients Excel because he has a desire for his clients to have a second to none experience when it comes to their financial planning for retirement. David relentlessly strives to be the best at helping people prepare for retirement.The bedrock of David’s ethos is treating others as he would want to be treated.David works tirelessly to continually bring pertinent content to our clients and friends through our weekly newsletter and podcast. Through these, David brings informative content that may aid you in preparing for retirement. Through his financial planning work, David’s hope is that his clients are empowered to have a confident financial future.David and his wife, Mallory, have a daughter named Amelia and rescue dog named Oscar. They also have a backyard flock of chickens that Amelia loves to tend. David and his family are active in their church in Spartanburg. He is also a volunteer mentor with JumpStart, which is a ministry for people who have been recently released from prison.

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Excel in Retirement

Social Security COLAs Not Enough? Here's what to do. Ep. 113

March 01, 2023 • David C. Treece • Episode 113

With inflation at 40-year highs some seniors feel this year’s big cost of living increase in Social Security is falling short. Yahoo Finance had an article last week that said, “According to a new survey by the Senior Citizens League, 54% of older Americans think the 8.7% increase in the Social Security cost-of-living adjustment (COLA) this year won't keep up with inflation.”

What’s troubling is that the government’s rapid interest rate increases over the last year have done little to slow inflation. The latest government reports reveal inflation is remaining elevated at 6.4%. The government has stated they are resolved to bring inflation levels down to the 2% range, which means we have a long way to go at our current rate.

It’s a juggling act. The economy has continued to grow despite the rate increases which is a problem for the government. The Federal Reserve is attempting to not break the economy, and get inflation lowered.

Interestingly, for the first time in recent memory the government is on the other side of the table from investors like you and me. Generally, the government is trying to keep the economy going and the stock market growing. AARP reports, “Nearly half (48 percent) of households headed by someone 55 and older lack some form of retirement savings, according to the latest estimates by the U.S. Government Accountability Office.”

So, the government is now on the side of the table of folks with little to no savings. What I mean by this is the government is trying to lower the cost of things for those most impacted by price increases: those with little savings. We’ve got a front row seat to see how this plays out.

What should you do? Listen in to find out...

Do you have a question? Would you like to learn more? Email
Connect@ClientsExcel.com or call 864.641.7955.

Investment advisory services offered only by duly registered individuals through AE Wealth Management, LLC (AEWM). AEWM and Clients Excel, LLC are not affiliated companies. Investing involves risk, including potential loss of principal. Any references to protection, safety, or lifetime income, generally refer to fixed insurance products, never securities or investments. Insurance guarantees are backed by the financial strength and claims paying abilities of the insuring carrier. This podcast is intended for informational purposes only. It is not intended to be used as the sole basis for financial decisions, nor should it be construed as advice designed to meet particular needs of an individual’s situation. Clients Excel is not permitted to offer and no statement made during this show shall constitute tax or legal advice. Our firm is not affiliated with or endorsed by the U.S. Government or any governmental agency. The information and opinions contained herein provided by third parties have been obtained from sources believed to be reliable, but accuracy and completeness cannot be guaranteed by Clients Excel. The use of logos and/or trademarks of podcast hosting sites are the property of their respective owners and are not an endorsement by those owners of our firm or our program.

SPEAKER_00: 0:00

Welcome to the Excel in Retirement Show, where financial planning becomes understandable. Your host, David C. Treese, is a licensed financial advisor who specializes in retirement income planning. Do you know where your income will come from in retirement? David helps people know where their paychecks will come from in retirement. David's desire for each of his clients is to have financial confidence, protection, and growth. We believe this is achievable with the right plan in place. Together, we'll build a plan specific to your financial goals. We work with clients all over, and we'd love to connect with you. Go to clientsexcel.com to connect with us. If you'd like to speak with us, call our office at 864-641-7955. Thanks for listening. Now to the show.

SPEAKER_01: 1:04

Welcome to the Excel in Retirement show. This is episode 113, 113. I appreciate you taking a few minutes to listen in. A few years back, Mallory and I, my wife, we were on a long road trip back from Pennsylvania. We were coming back to South Carolina. We had gone up there for a friend of mine's wedding and it was the summertime and Mallory was pregnant with our first daughter, Amelia. And to pass the time as we were driving back south, we made a phone call. Have you ever been on a phone call or called a friend and been talking and been so engulfed in the conversation that you lost track of time? Well, we didn't lose track of time in this situation. We lost track of the gas gauge somewhere in the mountains of West Virginia. Here I was with no gas, a pregnant wife, and it was hot outside. It was not my proudest moment. It's easy to think if we just had a little more gas to make it to the next exit, if only. You may have been in a situation like that. Hopefully it wasn't quite so embarrassing. With inflation at 40-year highs, some senior citizens feel this year's big cost of living increase in Social Security, that big COLA that we got, the largest one I believe since 1981 in fact, but many people are feeling like that's falling short. It's not enough. Yahoo! Finance had an article last week that said, That is troubling for sure. And what's even more troubling is the government's rapid interest rate increases over the last year have done little to slow down inflation, as evidenced in this sentiment. But in government reports also, the latest government reports reveal that inflation is remaining elevated at 6.4%. So the government has stated, we always want to look and see what the government is stating, and they are stating that they are resolved to bring inflation levels down to the 2% range, which means we have a long way to go at our current rate. It's a juggling act, though. Let's be honest. The economy has continued to grow despite the rate increases, which is a problem for the governments or the Federal Reserve. It's a problem. The Federal Reserve is attempting to not break the economy and to get inflation lowered. And so that is certainly a juggling act. Interestingly, for the first time in recent memory, the government is on the other side of the table from investors like you and me. Generally, the government is trying to keep the economy going and the stock market going, right? They want to keep the economy going and the stock market growing. AARP reports that nearly half, 48% of households headed by someone 55% and older lacks some form of retirement savings, according to the latest estimates by the U.S. Government Accountability Office. Wow, that's troubling. So the government is now on the other side of the table of folks with little to no savings. What I mean by this is the government is trying to lower the cost of things for those impacted the most by price increases, which are those people with little to no savings. We've got a front row seat to see how this plays out. It will be certainly interesting to see if the government moves back around to the side of tables of investors and tries to keep the economy going or how long this persists. So what should you do? This begs the question, what should you do? When we are preparing for retirement or we are in retirement, we should have three types of money. And so we color code them in our office. We have green money, which is our bill paying money or our budget money. And then we have blue money, which is our income money. And then the red money, which is our long term growth stock market money. We should either have 10 years of income money in the blue bucket or 40 to 60 percent of our funds there, depending on our age and our unique circumstance. What we try to do is we project out what it's going to take to pay your bills for the next 10 years in retirement and look at big expenses, whether that's home maintenance or medical expenses or taxes or whatever the case might be. And some folks find this exercise very challenging. And so if that's very challenging for you, we tend to go anywhere from 40 to 60 percent of a person's money in that blue bucket that we allocate for expenses over the next 10 years. 10 years. But after we have systematically decided what we are projected we will need in income or expenses over the next 10 years or decade, we then want to allocate the rest of our money to the red bucket after we have that six to nine months of bill paying money in the green bucket. Most people need money in the stock market throughout their retirement for one simple reason. We don't want to run out of gas in retirement. And what I mean by that is the market grows with inflation over time, and it may protect our purchasing power. Let's face it, if we have stowed away money in the bank, we've lost 6.4% of it the last year to inflation. So your money is buying less, so between 93% and 94% of what it could have bought last year. What we see if we look at charts of the stock market is that the market grows over time. And with this appreciation and growth that we experience, we may be able to increase our spending amount in retirement if it's needed or as inflation continues to grow. I'm not an advocate, though, of having all of our money in the market all the time in retirement. We should be measured in our approach and have our income money as insulated as possible from market gyrations and unexpected geopolitical events, whether that be a war or a terrorist event or some sort of black swan event that we can't predict. Now, let me say, it's easy in our country to see the division and turmoil we have going on, but we would be wise to remember that there is nowhere better than America. And I'm sorry if that offends you, but I sincerely believe that. There's thousands of people that are trying to get what we have as American citizens right now. If the U.S. economy and the U.S. stock market isn't worth investing in, I'm not sure what else is. I would be happy to talk with you if you have a question or would like to share some feedback on this podcast. You can call our office at 864-641-7955, or you can email us at connect at clientsexcel.com. Hope you have a great week.

SPEAKER_00: 8:26

Take care. Investment advisory services offered only by duly registered individuals through AE Wealth Management, LLC. A.E. Wealth Management and Clients Excel are not affiliated companies. Investing involves risk, including potential loss of principal. Any reference to protection, safety, or lifetime income generally refer to fixed insurance products, never securities or investments. Insurance guarantees are backed by the financial strength and claims-paying abilities of the insuring carrier. This podcast is intended for informational purposes only. It's not intended to be used as the sole basis for financial decisions, nor should it be construed as advice designed to meet particular needs of an individual situation. Clients Excel is not permitted to offer and no statement made during this show shall constitute tax or legal advice. Our firm is not affiliated with or endorsed by the U.S. government or any governmental agency. The information and opinions contained herein provided by third parties have been obtained from sources believed to be reliable, but accuracy and completeness cannot be guaranteed by Clients Excel. The use of logos and or trademarks of podcast hosting sites are the property of their respective owners and are not an endorsement by those owners of our firm or our program.