The Central Bank is still trying to tame the fastest price escalation the nation has witnessed in four decades. As rates increase, it pays to inflation-proof hard-earned income. Wealthy investors want to avoid the current and long-term cost of living by eating away at their nest eggs.
According to the Consumer Price Index (CPI) report, prices rose 7.9% in February 2022 compared to February 2021. This is the most significant annualized CPI inflation growth since January 1982.
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How did we get here?
The worldwide state of affairs results from varying events. Inflation hit a 40 year high recently, which is due to:
- Covid-19 pandemic
- Job loss/fewer workers
- Supply chain disruption
- Government spending
- Stimulus spending
- Accelerated re-opening of the economy
- Geopolitical turmoil (Russian-Ukraine war)
We have seen rising inflation cause dramatic price increases. It still looks rough when we cut out volatile energy and food prices (core CPI). In February, Core CPI rose by 0.5% and climbed by 6.4% over the past year—the most significant gain since August 1982.
While synchronized recovery efforts do not seem to be reducing economic tension, many investors have made fear-based decisions, were forced to retire early, and tapped into savings accounts pre-maturely.
Inflation On A Local Level
A dollar doesn’t stretch like it used to—Utahns are feeling it. AAA reports that gas averages $4.30 a gallon in Utah— the state’s highest gas price in history. The “mountain region” of Utah, Wyoming, Colorado, Montana, Kansas, and Missouri witnessed the biggest Consumer Price Index (CPI) (inflation) increase in the United States—almost 10%.
Families report feeling burdened by a big jump in rent, groceries, and gas. It doesn’t look like prices will improve anytime soon.
As the Fed is taking steps to downturn inflation, including raising interest rates, working with a financial advisor in Bountiful, UT, can alleviate worries about where we are headed and how to proceed.
Inflation On A National Level
Since inflation rates are not uniform throughout the country, take a look at the top 11 highest inflation impacted cities across the nation:
- Tampa, Florida: 9.6%
- Riverside, California: 8.6%
- San Diego: 8.2%
- Denver: 7.9%
- Dallas: 7.8%
- Los Angeles: 7.5%
- Minneapolis: 7.2%
- Chicago: 6.8%
- Boston: 6.3%
- Washington, D.C.: 6%
- New York: 5.1%
COVID-19
As the Coronavirus impacts subside, an ongoing concern of new sub-variant strains still concern many citizens. The CDC estimates that the Omicron BA.2 sub-variant is now nearly a quarter of new COVID cases across the nation.
Job Loss
In February 2022, the U.S. unemployment rate decreased to 3.8%. Unemployed individuals fell to 6.3 million. The unemployment rate for Utah was 2.2% as of January 2022.
Russia-Ukraine War
As NATO and western allies recently gathered to discuss fresh support for Ukraine, the U.S. announced new sanctions against Russia. In a series of emergency summits with world leaders, President Biden says we would welcome 100,000 refugees fleeing the war. The United Nations calls for a peaceful end to the war, blaming Russia for a humanitarian crisis.
What’s in store?
Volatile markets will come and go, so plan wisely by equating them into your long-term plan. Wealthy individuals need proactive tax planning to off-set the impacts of inflation. Diversification can support the protection of your retirement savings, especially.
In the days ahead, it pays to have a CFP® professional in Utah who has undergone rigorous education and training, to provide the advice needed to reach financial goals.
Interest rate hikes
The Federal Reserve approved a .25% point rate hike as of their meeting on March 16, 2022, the first since December 2018. Officials predict at least six more rate increases to coincide with the six remaining meetings this year.
Economic growth is expected along with the outlook of continued pain caused by inflation. Higher costs in gas and groceries should be planned for in your monthly budget.
What can we do to ease the pain?
Having a comprehensive retirement plan can ease the pain by supporting the safety of retirement savings, no matter the status of the economy. Families who work with our team gain the benefit of working with fiduciary CERTIFIED FINANCIAL PLANNERS™ who push back inflation by making a magnitude of vital decisions based on your best interests.
Under-prepared retirement efforts can create severe long-term consequences. ARS can help avoid that through a method called defined outcome investing.
How to plan for retirement more effectively?
Higher inflation calls for more strategic wealth management. Start by getting financial advice you can trust. ARS provides a transparent fee structure so our clients know what they pay and what services they receive for that fee.
Professional financial planning is imperitive for affluent families to ensure their wealth maintains and grows. High inflation should not be the reason your nest egg falls short. Contact us for a no-obligation appointment so we can have an honest conversation about your retirement concerns.
Use this collection of downloadable complimentary eBooks to use as part of the retirement planning processes.
Read: 6 Reasons to Hire a CERTIFIED FINANCIAL PLANNER™
CERTIFIED FINANCIAL PLANNERS™ at Advanced Retirement Strategies
Working with a CERTIFIED FINANCIAL PLANNER™ is an excellent investment of your time and money. With the high standards for CFP® certification, you’ll know you’re getting the expertise and knowledge of a highly-trained and educated professional who will always act in your best interests and with the loftiest ethical standards.
Our team of retirement planners and investment advisors in Bountiful, Utah specializes in helping diligent savers with $250,000 or more of investment and retirement assets (not counting your primary residence) prepare for and then transition into retirement.
If you’re looking for a CFP® to help you live the retirement you have dreamed of, contact us now.
