Financial Views Newsletter – Spring 2022
Inflation rates in the US have achieved historic heights, topping out at 7.9% in March 2022.1 Inflation can be pernicious for retired investors, but there are steps you can take to protect your savings. 2
Stay invested, and diversify
A diversified portfolio is one of the best defenses against long-term inflation. Stocks have historically outpaced inflation over time and fixed income funds may reinvest in holdings that might bear higher yields. Treasury Inflation-Protected Securities (TIPS) and Series I Savings Bonds can also help your portfolio weather periods of inflation. And history suggests that staying invested through these times is a better strategy than jumping in and out as the markets change.3
Pay off or refinance variable debt
Variable interest rates rise when inflation rises, causing higher payments for holders of variable debt, like consumer debt or adjustable-rate loans. In conversation with your advisor, consider a plan to pay off this debt. Or refinance adjustable rate loans to a fixed rate.
Pre-pay, buy in bulk, or substitute
When prices rise, savvy shoppers consider prepaying for big-ticket items, or stocking up on commonly used household goods to off-set increasing costs. From stocking your freezer to replacing an appliance, or even paying an upcoming tuition bill, if you know you will need it, think about paying for it sooner rather than later. And always explore pricing options: is there a cheaper substitute that will deliver the same value?
Build inflation into your plan
Working with your advisor to build a plan that can account for periods of inflation is critical. By exploring a variety of scenarios and projections, your advisor can help you and your plan anticipate and respond to inflation. Individuals on a fixed income are often impacted by inflation, but a smart plan–and willingness to adjust spending based on changing conditions–can help these individuals stay on track.
April is National Social Security Month
The Social Security administration estimates that approximately 97% of older adults receive or will receive Social Security benefits, making this program a foundational component of retirement income for many Americans.4 It is important to integrate your benefit into your comprehensive financial plan.
Your advisor can help answer your questions about Social Security, including eligibility, how and when to file, estimating your approximate monthly payment, claiming spousal benefits, and more.
National Volunteer Week, April 17-23
Volunteering can offer composure, purpose, and community in times of uncertainty. Celebrate National Volunteer Week by connecting with one of these organizations working to make a brighter future for Minnesotans.
Education
- Literacy Minnesota
- Reading Partners, Twin Cities
- Minneapolis Public Schools
- Science Museum of Minnesota
- Art Buddies, Minneapolis
Hands-On
- Open Arms, Minnesota
- People Serving People
- Twin Cities Habitat for Humanity
- Wildlife Rehabilitation Center of Minnesota
- Volunteer Lawyers Network
One Stop Shop
Hands On Twin Cities is the oldest surviving volunteer center in the United States, with a 103 year history of serving the greater good. They connect volunteers, nonprofits, and corporations to support impactful volunteerism in Minneapolis and St. Paul.
1 https://www.usinflationcalculator.com/inflation/current-inflation-rates/
2 https://www.schwabmoneywise.com/content/should-i-worry-about-inflation
3 There is no guarantee that a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk. Past performance is no guarantee of future results.
4. https://www.ssa.gov/policy/docs/population-profiles/never-beneficiaries.html
