Inflation ???

[baldilocks]

Being retired, one thing that really worries me is inflation. Money printing has become the big gorilla in the room. We have already seen it in the grocery store and at the gas pump (not just from the pipeline shutdown). Oil was at $66 USD today. Higher energy costs affect everything including our cruise costs. What are you planning to do to hedge against inflation?

[cb at sea]

Stop buying stuff!

 

[Covepointcruiser]

You don’t need to worry as the current government says inflation is not a problem.   They have, of course, not counted medical, food or fuel costs.   Don’t believe we will see much of a “cost of living” increase in social security or pensions.

[lissie]

We have investments which more than keep up with the rate of inflation 

[PORT ROYAL]

On 5/18/2021 at 1:04 AM, baldilocks said:

Being retired, one thing that really worries me is inflation. Money printing has become the big gorilla in the room. We have already seen it in the grocery store and at the gas pump (not just from the pipeline shutdown). Oil was at $66 USD today. Higher energy costs affect everything including our cruise costs. What are you planning to do to hedge against inflation?

We are amongst the lucky ones, my Wife worked 28 years for a major American Oil Company, 11 years in a senior position.  The dividends on share options alone more than pay for all our vacations, plus augmented pension and lump sum on early retirement, which she cleverly converted into share options.  

Myself, a Project Executive for a Saudi Oil/Energy Group.

But it was not delivered on a plate or from handouts. We both worked hard for what we achieved.

So, it’s what we did early and throughout our careers has set us up very nicely for early retirement.

The major gripe is the huge amount of Tax we pay every year.

 

[iancal]

We have enjoyed lower than expected inflation and higher than expected investment returns over the past nine years of retirement.  Perhaps this party is winding down a little.

 

We use our investments as a hedge against inflation. Nothing else we can do.  Besides the usual of keeping our eyes peeled for attractive travel offers and last minute cruises.   We also consider currency.  Delaying a South African  trip by a year reduced the cost by 15 percent simply because of inflation.  We shaved off another 20 or 25 points by dealing directly with a safari firm in South Africa and bypassing our local TA's.  Much better pre sales service and information.

[SargassoPirate]

We found that after retirement there were a lot of things that we no longer spent money on - such as clothes for work (white collar jobs) lunches out at work, commuting costs, etc.  Plus we were no longer paying into retirement plans or social security.  Our retirement income just about equaled our working income, and without the extra expenses of working.  

 

[Traveling Mike]

Changed my retirement plans from being in the next year to being after I see what happens in the 2022 and 2024 elections.  At this rate I may be working until I am 90.

[ysolde]

On 6/2/2021 at 7:58 AM, SargassoPirate said:

We found that after retirement there were a lot of things that we no longer spent money on - such as clothes for work (white collar jobs) lunches out at work, commuting costs, etc.  Plus we were no longer paying into retirement plans or social security.  Our retirement income just about equaled our working income, and without the extra expenses of working.  

 

I think this is our big question as we ease into retirement (for us -- me a housewife, my husband an author, lots of passive income from various sources already -- retirement looks like it will be a gradual thing, not a a one day working, one day not thing).  How much will our expenses and lifestyle change?  Already we are noting that certain expenses have slowly decreased with the pandemic, as we stopped dining out as much.  Many of my husband's business trips, which we took for granted as an annual thing to various locations, we are re-thinking.  Can they be reduced?  Can some meetings simply happen on Zoom or something similar?  Others, he thinks, require a personal touch.

 

We have discussed with our financial advisors what our investments should look like in ten, twenty, twenty-five years.  All of this is an ongoing discussion.  And, yes, it is a bit daunting.  Long gone are the days of our grandparents, who could count on a pension, supplemented by Social Security and personal investments.  Their retirements were beyond comfortable.  Then again, international travel, even in first class, was probably not quite as comfortable in some respects back then as what we experience now.  I'll take lie-flat seats in Business Class and really good stabilizers on cruise ships and ocean liners today over what my grandparents experienced back in the 50s and 60s, I suspect.  But that is not the topic here.

[rkacruiser]

On 5/20/2021 at 7:58 AM, PORT ROYAL said:

The major gripe is the huge amount of Tax we pay every year.

 

Isn't that the truth!  Encouraged to save, invest, open IRAs, buy tax-sheltered annuities:  When it became time when these accounts had to be tapped:  oh, la, la, the tax man said!  I cringe every time a legislator on the Federal or State level talks about cutting taxes.  In recent years, each time there has been a tax cut, my effective tax rate increased.  

 

 

On 5/21/2021 at 11:42 AM, iancal said:

We have enjoyed lower than expected inflation and higher than expected investment returns over the past nine years of retirement.  Perhaps this party is winding down a little.

 

Yes, I think it may be.  Kiplinger is forecasting an inflation rate of 5% at the end of 2021 with a bit higher 10 year Treasury rates.

 

3 hours ago, ysolde said:

We have discussed with our financial advisors what our investments should look like in ten, twenty, twenty-five years.  All of this is an ongoing discussion.  And, yes, it is a bit daunting.  

 

"...an ongoing discussion."  That's the way it ought to be.  "it is a bit daunting."  It needs not be.  If one has a financial advisor whom you trust because of good recommendations that she/he have given you and you have educated yourself over the years in financial matters, one's finances in retirement does not need to be more worrisome than they have been in pre-retirement years.  There will always be--as there was before my retirement--the question of "what should I now do"?

 

Sometimes, the answer is to do nothing.  Sometimes, the answer is to be a contrarian and buy when others are selling. (**)  Sometimes, I wait too long to make a decision until "the train has left the station", i.e. an investment in Moderna.  

 

** As a contrarian, I bought a few shares of JCP when others were selling.  I did so because I have been a long time customer of the Company, liked their products, and service.  After the management had been replaced that caused the Company issues, the stock price continued to decline.  I liked what I was learning about the plans for a revitalized Company.  I had "faith" in them.  Other investors were not as convinced as me and I sold my position at a loss.  But, that did help a bit on that years's 1040.  You win some; you loose some!  😀  

 

 

[ducklite]

Our social security will cover our cost to have food, shelter, and medical care as we are right now +25%.  My husband has a pension (I get 100% should something happen to him) and we have enough in investments to retire right now, but we will keep working until 65 and not collect SS until 67 to maximize savings and income during retirement.  

In the worst case we could downsize to a smaller home and pay cash for it and cut out collecting wine, eating out, and travel which is where half of our post-savings income goes.

[lissie]

To all those peopple who are delaying retirement for reasons  which basically boil down  to "having more money". 

 

There is one thing that you are assuming - you are assuming you will continue to be healthy. 

 

A major social media platform just reminded me that 4 years ago we were excitedly exploring Shanghai at the planned start of a 4 month trip along the Silk Rd to Istanbul.  

 

It will NOT be reminding me that a week later my partner was in a Chinese hospital fighting for his life after suffering high altitude pulmonary odema.  

 

He survived but he'll never be as fit as he was then, now takes handfuls of drugs a day, has had a heart valve replaced, and now every trip starts with "can we get insurance". 

 

Don't assume life is  forever 

[SargassoPirate]

lissie, a very wise mentor told me years ago that one can always make more money, but you can't make more time.  She Who Must Be Obeyed and I made a pact when we retired almost 20 years ago - if there's an opportunity to do something, we go for it.  Sometimes she goes for it with a girl friend, and sometimes I go for it with a buddy - like a Route 66 trip - and sometimes we go for it together.

 

And......we are still adding to our bucket lists.

[ducklite]

20 hours ago, lissie said:

To all those peopple who are delaying retirement for reasons  which basically boil down  to "having more money". 

 

There is one thing that you are assuming - you are assuming you will continue to be healthy. 

 

A major social media platform just reminded me that 4 years ago we were excitedly exploring Shanghai at the planned start of a 4 month trip along the Silk Rd to Istanbul.  

 

It will NOT be reminding me that a week later my partner was in a Chinese hospital fighting for his life after suffering high altitude pulmonary odema.  

 

He survived but he'll never be as fit as he was then, now takes handfuls of drugs a day, has had a heart valve replaced, and now every trip starts with "can we get insurance". 

 

Don't assume life is  forever 

We are fortunately that we get a lot of vacation time, and we have been starting to take some of the trips we want that require more physical ability for this exact reason.  We'll delay Norwegian Fjord, Panama Canal, etc. until we are older and want more of a "drive by" experience.

 

[iancal]

On 7/28/2021 at 3:58 PM, lissie said:

To all those peopple who are delaying retirement for reasons  which basically boil down  to "having more money". 

 

There is one thing that you are assuming - you are assuming you will continue to be healthy. 

 

A major social media platform just reminded me that 4 years ago we were excitedly exploring Shanghai at the planned start of a 4 month trip along the Silk Rd to Istanbul.  

 

It will NOT be reminding me that a week later my partner was in a Chinese hospital fighting for his life after suffering high altitude pulmonary odema.  

 

He survived but he'll never be as fit as he was then, now takes handfuls of drugs a day, has had a heart valve replaced, and now every trip starts with "can we get insurance". 

 

Don't assume life is  forever 

This is exactly why we retired early why almost all of our frequent, pre covid, travel was extended independent land trips. 

 

We are both in reasonably good health and have the energy and the desire to travel.  We do fewer cruises in retirement and they are usually last minute cruises as an add on to land trips.  Gives us break from DIY travel. 

 

The last thing we want is to be the richest people in the care home or be one those people sitting in a rocking chair who wishes he or she had done this or that while they had the good health to do it.  Good health is indeed fleeting.

Edited August 4, 2021 by iancal

[rkacruiser]

5 hours ago, iancal said:

The last thing we want is to be the richest people in the care home or be one those people sitting in a rocking chair who wishes he or she had done this or that while they had the good health to do it.  Good health is indeed fleeting.

 

"Good health is indeed fleeting."  As I am finding.  Completely agree with this paragraph.  But, I do want to leave behind what I hope will be significant support for a scholarship that honors the memory of my Mother at my Alma Mater.  

[baldilocks]

At 75, we have enjoyed 10+ years of wonderful travel, domestic and abroad. We are not rich in money so we have to take advantage of every break we can get....frequent flier miles, hotel points, off season travel, etc. We know of many people who do not wish to travel...it is their choice....and we know of many people who waited so long to travel that health reasons cut time short. We will soon get to a point that travel may have to be curtailed a bit, but boy do we have memories when we are rocking away our last years in our white rockers on the front porch.

[Traveling Mike]

Worried about inflation in May.  I am wondering what he is thinking now.  We stopped shopping for everything including most groceries.  We purchased out our car lease because there are no Subaru Legacys in California.  I am just waiting for the airlines and cruise lines to charge fuel supplements.

 

[iancal]

One thing we have done when traveling is to keep track of exchange rates.

 

We delayed a trip to South Africa by a year and saved 15 percent simply on currency. The Rand was going down.    We have done the same when going to the UK.   We decided to go when the GBP was at a low vis a vis our currency. 

 

We cannot control inflation.  What we can do is to shop carefully and make every dollar count.  

Edited December 12, 2021 by iancal

[SargassoPirate]

In a high school business class over half a century ago the class had to read and discuss "The Richest Man In Babylon".  It changed and charted my life.  I still have my copy and read it again every few years.  Essentially it's save at least 10 percent of everything you earn - pay yourself first - and don't spend money you don't have buying things you don't need to impress people you don't know. 

 

Our kids adopted the philosophy and are financially independent and accumulating wealth for their own retirements.  Example: Our son is driving the same vehicle that he bought in 1999.  That beats my record - I'm still driving a truck I bought in 2004 and have no plans to replace it since I have maintained it myself and it's in perfect shape.

 

One more thing, you don't fix money problems with money.

 

 

[rkacruiser]

On 12/12/2021 at 9:48 AM, SargassoPirate said:

In a high school business class over half a century ago the class had to read and discuss "The Richest Man In Babylon".  It changed and charted my life.  I still have my copy and read it again every few years.  Essentially it's save at least 10 percent of everything you earn - pay yourself first - and don't spend money you don't have buying things you don't need to impress people you don't know. 

 

Never read the book, but learned these lessons from my Grandparents and Parents.  Two of the smartest financial decisions I think I ever made was when I finished paying my mortgage, I continued putting that same amount of money into savings or a MMF (when the rates were good) for a very long time.  I did a similar thing when I received a raise in my salary.  Whatever the amount of the raise was went into the bank.  And, I still lived comfortably and paid all of my bills.  

[SargassoPirate]

13 hours ago, rkacruiser said:

 

Never read the book, but learned these lessons from my Grandparents and Parents.  Two of the smartest financial decisions I think I ever made was when I finished paying my mortgage, I continued putting that same amount of money into savings or a MMF (when the rates were good) for a very long time.  I did a similar thing when I received a raise in my salary.  Whatever the amount of the raise was went into the bank.  And, I still lived comfortably and paid all of my bills.  

 

Without venturing into the politics of economics and taxation, it's always fascinated me how even someone of modest means can live well by following the basic pay yourself first formula.  Back in the days when I was working and hiring new employees I would encourage every new hire to sign up for the 401k program immediately.  I always told them if they did so before they got their first paycheck, they would never miss it.  Some would and some wouldn't.

 

I retired in my early fifties.  Some of those same employees who never signed up for the 401k lamented that they would be working until they were eligible for social security.  Some of those who signed up for the 401k program were formulating their own early retirements.

 

They were all offered the same opportunity.

 

Just sayin'

[rkacruiser]

7 hours ago, SargassoPirate said:

Back in the days when I was working and hiring new employees I would encourage every new hire to sign up for the 401k program immediately.

 

One of the lessons that I learned was to take advantage of the 403(b) program as soon as I could do so.  Started with small contributions and gradually increased them as the years went by.  Now, a very nice source of additional income for me.  I have a Nephew who is eligible for this program and I encouraged him from before his first pay check was received to get started with this plan.  2 young children, a mortgage, and high living expenses (he lives in Alaska):  he may feel as I initially did before I opened my account--I can't afford this at this time.  

 

This reminds me to ask him about this when we have our Christmas conversation.  

[shipgeeks]

As a child, I thought that my life was extremely unfair, as I could only buy things that my meager allowance provided.  

In college, and in my 20's and 30's, I was limited to what cash, savings account, and travellers cheques I had.  No one I knew had a credit card.

Now I really appreciate the fact that I was careful all those years, and that my husband is the same.  Our thrifty habits of all the years past have given us a very comfortable retirement (and probably no over-the-top spending habits).  We can enjoy our cruises, for example, without obsessing about pursuing a price drop after booking.  If we're okay with the price we booked, we leave it at that.

But to answer the original question: Yes, we are seeing a lot of increases in the price of groceries, gas, etc.

I enjoyed all the previous posts.  Lots of good thoughts.

[jcc1025]

I totally agree with the 401K crowd. I was working when this program was established. Started with 5% and as I got promotions and raises added to the percentage every year. I am 73 and retired at 56. I also went through a number of financial advisers, watching what they did and how they managed my money. I would recommend what is now an old book "Where's my Yacht". I finally fired them and developed a spread sheet on what I would need in retirement. Set up a portfolio that balances a little risk with a good return with dividend stocks that provide about 4% return regardless of the market movement. I have seen these ups and downs come and go (2008 for example) and don't panic. Prices and the market will move and this one, like the others may last for a year or so but I don't listen to media financial experts or opinion people on either money or politics and things have worked out just fine over the past 15 years. Cruising is our favorite vacation and we have continued to take one or two each year, Covid excepted, since our retirement. Take a deep breath, come back off the ledges and things will be all right.