"Americans facing rising inflation have become nostalgic for prices from just two years ago - when the cost of some basic groceries was almost half.
In the past, people may have cynically recalled how the cost of everyday items had risen over decades, but now people see prices escalating with the space of a few months."
What we are watching today- at the grocery store, at the gas station, and on our utility and tax bills- is the erosion of our purchasing power. The article above expresses how the cash in our checking accounts buys half of what it purchased a short time ago. For many Americans living on a fixed income, this is life-changing. The ultimate goal of retirement is to be able to pay for the same goods and services (purchasing power) that we are able to pay for before retirement, over our lifetime and a two-person retirement, which averages 30 years.
So the lifetime "investment goal" must be to grow savings and investments at a rate higher than these increasing expenses - to keep up with and to beat this constantly-rising cost of living.
It would be unwise for the average retiring client couple to believe they will live “only” the average thirty-year retirement. We assume they can live even longer, it's important for us to help them plan to fight off even more long-term erosion of purchasing power.
Holding diversified equity portfolios is the most reliable (if not the only) means of doing this that we know, using history as our guide. It is how we help people eliminate the real risk of retirement, which is outliving one's money.
When an American (or an American couple) steps over the threshold of retirement, they find themselves facing two doors. Door Number One says, “The money outlives the people.” And Door Number Two says, “The people outlive the money.”
And these retirees must pass through one door or the other. It’s as plain and simple as that. Cast aside the issues of debt, aging, social security, global monetary policy, and all those outside issues we can’t predict, much less control.
We focus on what we are able to control: whether the money outlives the people, or they outlive their money. It is our mission to help people plan their way through Door Number One.
Source: DailyMail, Nick Murray, Jeremy Siegel