Ongoing concerns of inflation are a worry for many, especially those nearing the age of retirement or those that are currently retired. Morningstar’s Jeremy Glaser and Christine Benz engaged in a conversation about inflation, which provided several key insights for retirees.

Protecting Yourself From Inflation

Inflation is especially troublesome for retirees because many of their primary industries, such as healthcare and long-term care, are experiencing these increased rates. This poses a problem because many retired individuals are on a fixed income schedule that was carefully planned many years ago.

As a result, inflation rates are causing a bit of a panic among retirees. Many are wondering if these inflated rates will lead them to run out of money part way through retirement. Fortunately, there are several things that retirees can do to protect themselves from inflation.

What to Include

If your retirement income planning process includes drawing off of your portfolio, there are several avenues you can take to ensuring its success through times of inflation. At CKS Summit Group, we offer multiple portfolio compositions that provide ideal benefits by giving you protection during times of economic uncertainty.

In terms of adding value to your portfolio, Christine Benz suggests the following:

• Allocate 50% to Stocks: Historical data proves that stocks will out-earn inflation. However, this process takes a considerable amount of time. Benz points out that on a year-by-year basis, stocks are not entirely reliable, but over the course of time they are a solid investment against the risk of inflation.
• TIPS (Treasury Inflation-Protected Securities): Clearly, TIPS are well equipped to handle the harsh effects of inflation. This aspect makes them an easy choice when building a dynamic portfolio, but there are still some reasons to be wary of TIPS. These securities tend to be rather interest-rate sensitive, which causes rates to rise during times such as these. Benz suggests investing in shorter-term TIPS to bypass some of these higher rates.

What to Avoid

It is not always enough to simply add different assets to your portfolio. Counteractive measures are also a solid strategy to avoid worries regarding inflation. The following are included in Benz’s list of assets to avoid when developing an inflation-protected portfolio:

• Volatile REIT Assets: Real estate is a very common piece in the makeup of most portfolios. These types of assets often generate substantial profits even during times of inflation, but Benz cautions against them because of their interest rate sensitivity. For this reason, their risk may not be worth the reward for a retiree looking for a more stable investment opportunity.
• Precious Metals: Despite their lengthy history, Benz feels that precious metals pose the same threats of REIT assets in the fact that they are often very volatile. This volatility is what leads Benz to advise retirees to stray away from selecting precious metals as standalone holdings in their portfolios.

Portfolio Development Expertise From CKS Summit Group

These many different types of assets can become very confusing very quickly. It is also tough to gather all of these assets together into a balanced portfolio that will provide enough income to last the entire length of an individual’s retirement. Fortunately, the financial advisement specialists at CKS Summit Group can help!

CKS Summit Group is proud to offer professional services in several areas of financial planning such as: retirement income planning, wealth management, tax efficient strategies, asset protection, legacy planning, and IRA & 401K rollovers.

Schedule your personal strategy session to work with one of our financial planning experts on your plans for retirement. Click here to schedule your strategy session today! Thank you, and we look forward to working with you to develop a portfolio that best meets your needs soon.