Facing Retirement Income Challenges in a High-Cost World

Casual Friday: Financial Insights

In this episode, we delve into the latest insights on retirement planning amidst rising living costs and inflation. Here’s what we cover:
1. Current Inflation and Social Security Adjustments:
- 2025 Cost-of-Living Adjustment (COLA): A 2.5% increase for Social Security reflects slowing inflation, down from higher increases in recent years.
- Impact on Retirees: While the COLA helps, it's still challenging to keep up with the high costs of essentials, particularly healthcare and housing.
2. Withdrawal Strategies and the 4% Rule:
- Evaluating the 4% Rule: We examine the historical basis of this popular retirement withdrawal rate, noting that only once in the 1960s did it dip to 4% for balanced portfolios.
- Market Conditions’ Influence: Market variability underscores the importance of a flexible withdrawal strategy, as safe withdrawal rates can fluctuate with economic cycles.
3. Increasing Life Expectancies and Longevity Risk:
- Life Expectancy Trends: Today’s retirees may live well into their 90s, leading to what’s known as "longevity risk," where the risk of outliving one’s savings intensifies.
- Balancing Growth and Income: Strategies for ensuring portfolios generate growth and income to maintain quality of life over longer retirement horizons.
4. Key Takeaways:
- Inflation remains a challenge despite recent deceleration.
- Retirees must manage longevity risk through growth-oriented investments alongside traditional income-focused strategies.
- Adapting withdrawal rates and building resilient portfolios can help support a fulfilling, secure retirement.
Let’s break down these concepts with expert insights and actionable steps for today’s retirees and those preparing for their retirement journey. Tune in to navigate the financial landscape with confidence!
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The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results.
There is no assurance that the views or strategies discussed are suitable for all investors. To determine which investment(s) may be appropriate for you, consult your financial professional prior to investing. Investing involves risks including possible loss of principal. No investment strategy or risk management technique can guarantee return or eliminate risk. Indexes are unmanaged statistical composites and cannot be invested into directly. Index performance is not indicative of the performance of any investment and do not reflect fees, expenses, or sales charges. The economic forecasts set forth in this material may not develop as predicted.
The advisors of Ford Financial Group are Registered Representatives with and securities are offered through LPL Financial member FINRA/SIPC. Investment advice offered through Perennial Investment Advisors, a registered investment advisor. Ford Financial Group and Perennial Investment Advisors are separate entities from LPL Financial. Ford Financial Group, Perennial Investment Advisors, and LPL Financial do not provide tax advice or services.

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