End of 2021 Planning Observations

We are furthermore witnessing one of the most visceral supply chain disruptions in economic history – if there was ever a time for a passive, hands-off approach to financial planning or portfolio management, this is certainly not it.  

Uncertain Times Underscore the Importance of Retirement  Planning and Having a Sound Financial Plan  

While the development of a financial roadmap will not negate these concerns, it can  help by addressing the question of “What happens if?” What happens if I want to retire early? What if my retirement income is not as durable as I had thought because of rising inflation? What if Congress passes legislation that turns my estate plan on its ear & forces it to be rewritten entirely? Having a plan in hand will bring with it greater clarity about what developments the future could hold, as well as what our response to such developments would be. It is also a cornerstone in ensuring your financial stability. Retirement planning is obviously hugely important for anyone looking to maintain financial stability and sustain their retirement income.  

Think of the economy as a spider’s web – each strand is connected to the next, and if you were to pluck one section of the web, that would send reverberations to other strands across the rest of the web. Many of these strands, and the subsequent connections they have, are not among the first thoughts that people have about the economy. So, let’s take a minute and focus on the strand of inflation, and its subsequent connection to a commodity we use every day, oil.  

Given oil’s denomination in dollars, our money supply expansion has now translated directly into higher costs that we as consumers incur in everyday life. As I referenced a  minute ago, we see this trend unfold in practice at the gas pump every day, which then becomes a consideration to reflect when constructing a client’s financial plan.

Hedging Against US Inflation  

Ultimately, each plan is tailored to the specific client with whom we engage – for example, a focus of ours for our high-net-worth clients is the potential for a tax code overhaul coming out of Congress. For instance, leveraging assets such as life insurance or qualified investment accounts are an excellent means of mitigating the impact of income taxation. To the degree that you are able, maximizing IRA and 401k  contributions would be beneficial as well to capitalize on the preferential tax treatment of those accounts while taking into consideration any phase-out schedule that may be present on the accounts.  

The point, simply, is this: there are many variables that could impact your financial future, including US inflation. Financial planning in Alabama is no different. With the economic landscape unfolding as it has, this is no time for an autopilot approach to financial planning or portfolio management. Undertaking an active, planning-driven approach that considers each strand of the economy and its subsequent connections will likely prove to be greatly beneficial in the years to come.

David Guttery and Brandon Guttery offer products and services using the following business names:  Keystone Financial Group – insurance and financial services | Ameritas Investment Company, LLC (AIC),  Member FINRA/SIPC – securities and investments | Ameritas Advisory Services (AAS) – investment advisory services. AIC and AAS are not affiliated with Keystone Financial Group. Information provided is gathered from sources believed to be reliable; however, we cannot guarantee their accuracy. This information should not be interpreted as a recommendation to buy or sell any security. Past performance is not an indicator of future results.