Looking for our retirement safe harbor during an economic storm

By John Forcucci

The last time the U.S. experienced inflation above 8% and an unemployment rate below 4% was the early 1950s. According to former U.S. Treasury Secretary Lawrence Summers, every time inflation has exceeded 4% while unemployment was below 5% over the past 75 years, the U.S. has fallen into a recession within two years.

For many of us moving closer to retirement, the worries of the turbulent market, high inflation and a possible looming recession have shaken our confidence in our retirement plans. A writer and a teacher, my wife and I are not in professions that are known for high incomes, but we have a couple of things going for us:

1. We’re good at saving money.

2. My wife will have a pension.

We’ve been salting away money and working with financial advisors over the years to help provide for a secure retirement. As we hit our 60s and the market was strong, we had confidence in our planning. While we know that we’ve done the right things, followed our advisor’s advice and stayed the course during previous economic storms, this moment feels different.

The tide already seems to have turned in terms of the dark mood of investors, the gloom of the bear market and concern about recession. No matter how much you’ve saved, the thought of your money depreciating in buying power in the face of 8% inflation is daunting.

There have been numerous studies looking at the consumer confidence levels plummeting and the large number of people who have been forced to dip into savings — even their retirement accounts — to meet their normal living expenses. I imagine their confidence in their retirement plans has been badly shaken.

My wife, Lisa, and I both have planned to work at least until we’re 67, but now we’re wondering if we’ll be working longer than that if the economy continues in a downturn for an extended period. We’ve also began to realize that longevity is an enormous factor in our planning.

We recently published an article on the InsuranceNewsNet website: “Study finds Americans worry about the wrong retirement risks.” Essentially, we Americans aren’t factoring in the cost of living longer, especially the potential long-term-care costs that often accompany longer lives.

Many of my relatives made it to their late 80s or early 90s, while Lisa’s relatives have lived as long as a century. So that’s begun to color our retirement thinking as well.

A great positive during these stressful times is having confidence in your financial advisor. Providing strategies to your clients is only the business side of the relationship you have with those who are looking for your guidance in these turbulent times. Just as important are the personal relationship you have with your clients and the trust that they place in you to help them remain calm and weather the storm. We’re fortunate in that we have that type of relationship and trust with our advisor.

How are your clients reacting in this climate? Are they coming to you in a panic? Are they worried that their retirement plans are in jeopardy? Have they planned for their possible longevity and LTC costs? Many of the stories we’ve covered in recent months both in this magazine and on our website have highlighted the state of retirement advising and planning as the economy has hit rough weather.

We’ll continue to cover the economy and its impact on the financial advisor community and their clients. In the coming months, we’ll be digging deeper into how your clients are reacting under this pressure, the strategies you’re providing and how you are working with your clients to keep them on a steady course despite the headwinds. I’ll continue to share my thoughts on how my wife and I are reacting to the changing economy as we plan for retirement.

As you work with your clients and provide strategies — and comfort — I’d like to hear from you. What advice would you give your peers in financial services? What can you share with our audience that will help them provide service — and confidence — to their clients? Please reach out with your thoughts and advice for your peers: [email protected].

John Forcucci
Editor-in-chief