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Welcome to Ask an Advisor. This is an advice column where real financial experts answer questions from real people. The topic can be anything in the financial world, from retirement to tax, wealth management, or even advice on advice.
This week, as always, I’m handing the mic to my advisor — a certified financial planner and retire wisely in Meridian, Idaho. Mr. Straubel said many of his clients are very pessimistic about the future. said it could discourage his clients from saving for retirement.
In particular, these investors cite two concerns: social security and inflation.Social Security can only pay unless Congress acts 80% of its benefits By 2035, according to the board of directors of the program itself.On the other hand, the inflation rate remains high and the year-on-year change in the consumer price index is still 6% February is a percentage not seen since the early 1980s until last year.
As prices rise, cash savings are becoming less and less valuable, and the public interest to make up for them is headed toward bankruptcy. How can Strobel’s clients be confident that they will be able to retire?
But fatigue goes beyond mere retirement. These investors are also concerned about his ongoing COVID-19 pandemic, the war in Ukraine, political turmoil in parliament and many other concerns. And they are not alone.According to someone recently NBC News poll71% of Americans believe the country is headed in the wrong direction.
With this pessimism prevalent, how can wealth managers motivate their clients to keep saving for the future? Here’s how Strobel structures the question:
Dear Advisors,
One of the things we hear over and over from our clients is that they think America’s best years could be behind it. Especially for the younger generation, there is not much to look forward to. They have no pension, soaring cost of living and housing, constant hearing about how Social Security is in jeopardy, and benefits can be reduced and/or delayed. The world today is in turmoil: COVID, the war in Ukraine, the hyper-polarized politics of the United States.
With such a bleak outlook that could discourage investors from saving, it’s hard to imagine what life in retirement will look like. Recently, I have heard some people say that they don’t know if they will live to retirement age or not.
How do other financial advisors deal with this slump? How do you advise discouraged clients? There are many similarities in terms of market volatility, interest rate fluctuations. For those of you who are old enough to remember, how did you weather the storm back then?
— Ron Strobel, CFP, retired cautiously
And here’s what a financial advisor wrote: