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Hello, and welcome to this week's episode of the Capitalist Investor. As

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always, you have me, diamond hands D, and we got Tony the Tiger.

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And in again for Luke, Dave Abate. What's

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going on, man? Great to be here. Can't wait to do it, boys.

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I knew you were excited when I asked you, man. I've never seen

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somebody jumped at a chance. He's like, heck, yeah, I'll get on that podcast. I've

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been waiting, waiting for the call.

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All right, well, this, obviously, we look

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for different topics to talk about every week, and this one

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jumped right off the page at us. Basically, it was

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a Fox Business article about retirees consider

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returning to work during

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this inflation squeeze. And that

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is an extremely interesting topic, obviously, for us,

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because, you know, a lot of people in retirement are living on

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somewhat of a fixed income. So when that fixed income stays

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relatively fixed and the price of everything that you need goes up, that can

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obviously cause problems for those retirees. So

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it looked like just a couple quick numbers to set the table here.

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Social Security did increase

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3.2% this year to start

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2024. And it

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was, you know, it did get a relatively sizable

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increase back starting 2023. But still,

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you know, 27% of people, retirees, Social

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Security is their only income, and it averages about

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40%. It averaged about 40%

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of people's overall retirement income in

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retirement. But during this, this article, you know, essentially,

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they were saying about 62% of retirees were

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struggling to make ends meet and

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19% were delaying retirement just solely because

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of inflation and the prices of everything going up.

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So, yeah. What do you guys think? Inflation, obviously, very

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real topic. We've been talking about it for a long time now.

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What are your thoughts? All right, so

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I read this, I looked through this article. It was from, like, Motley ful

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or something like that, and they came up with a statistic.

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Social Security is not keeping up with random inflation because

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since 2021, food and shelter is up 20%,

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energy is up 40. And I don't think

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that Social Security is up that much. Now, the stock market's up

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42%, but bonds are down 15%. So I don't

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even know if portfolios are keeping up with

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inflation, to be honest. And then the

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article went on, this is where the disconnect

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comes, is the average Social

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Security paycheck is somewhere around

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$1,900 a month. The average

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retiree expenses are around 4800, is

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what they say. The gap, the difference between those two numbers is three grand

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a month. So using the rule of

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four 4% distributions from your portfolio,

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this is basically telling me that, like, millionaires are

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having a hard time keeping up with the rising cost of inflation

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because you're taking out 4% of a million dollar portfolio. That's 40 grand.

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But then I also looked up what's the average savings in retirement? And it's like

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the average retiree has 350 grand. So there's

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a lot of disconnects here. Like, I'm sure a lot of people fall

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into their expenses, but

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at the end of the day, we spend what we make. That's an american way.

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And when things start

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escalating, 5%, 10%, 20%,

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it's hard to come up with that money. So what happens is

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you take, your standard

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of living takes a decline, right? You can't do as many things, you

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can't buy as many things, or you just sit there and rack up debt, right?

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And that's not healthy either. So

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this is a big problem. I don't know where. I don't know where or when

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the rubber hits the road and when it becomes a crisis,

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but it's a big problem. A lot of things are up. A lot of

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percentage, 20% to 40% in the last three years.

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And that sounds like roughly 7%

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inflation every year on everything around us.

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So this topic to me feels like a continuation

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of the periodic stories or research you see

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coming out from some of the retirement plan providers

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indicating like, hey, there's a huge retirement

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readiness crisis ahead of us. Right. This is kind of the next

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chapter. And Tony, to your point of like, rubber hitting the road, I feel like

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this is the rubber hitting the road. Like these people are

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having some anxiety. There's a shortfall in

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the ability to pay the monthly bills due to the inflation

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increases. And now they've got to go to plan b of how are we going

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to fund this. Right? So we're going back to work. So the rubber really hits

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the road to me is there's, there's a silver lining here in that

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it feels like it's never been easier to pick up part time income with the

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gig economy and a side hustle. Like, there are a lot of ways to be

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creative to get some extra income. I think where the car

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breaks down, we'll go back to that analogy, is when the

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willingness and the ability to actually do those things

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goes away, because right as we age, our health normally, typically

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starts to decline. Can we actually take on

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that extra job to meet the gap?

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That's when I think the car actually breaks down. And now you have an

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irreparable situation. Yeah. Should we

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complain for a minute about fast food prices. I was scrolling through

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Twitter the other day, and over the last three and a half

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years, the price of everything on the McDonald's menu is

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up, like, two to 300%. Yeah. Like, I don't know

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how those places stay in business, honestly. Like, we've

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talked about it before. I wouldn't go to McDonald's regularly,

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but, you know, maybe a couple times a month. Like, I can count on

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one hand how many times I've been there in the last three years. Yeah, yeah,

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but, I mean, but it's like, I miss dinner. I'm really hungry. I'm

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driving by a McDonald's. I'm like, yeah, I did this a couple months ago. I

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think I was. I got on. I got. I went on my get off my

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lawn segment and was. I stopped. I got a

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quarter pounder, and it was like, $8.

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I'm like, I remember when they were given, you know, two for $4 or two

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for five or something. It's like, holy cow. And then you. You

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add on, like, the great service, you get along

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with that increased price, and it's just a great, you know, overall value package.

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So that's a great question. How are they staying in business? You told me. I

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mean, they have to. To, you know, now that

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everyone needs to make more money and minimum wage continues to creep

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up, they gotta. They gotta increase the prices.

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I mean, I understand the metrics behind it, but I don't. I don't

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know. Eventually, they're just gonna be. There's gonna be three people working in there

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making the food, and everything else will be a kiosk, which is transit. What

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is. It's transitioning to. Yep, it really is. And, like, your mention

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or your point on service, like, you almost have to, like, use the

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app to put in your order because, you know, if you just tell it to

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them, it's going to take, like, ten minutes, and they're probably going to mess it

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up. So at least if it's in front of them, then. Then they have a.

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You have a good shot. But, yeah, but before, if, you know, they didn't

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put in your medium french fries in the bag, you were, you know, upset

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about it, but now it's like a four dollar mistake.

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You might be turning around and driving back to pick that up. Exactly.

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I don't know. I saw something again, like, Twitter's.

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Twitter's an interesting place, or actually, what do you want to call it? It's

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like there was somebody just like, just remember what they did to us

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and somebody showed, like, a receipt from Taco Bell.

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Yeah, I saw that from, like, 1999 or something, and it

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was like, $5. Got you, like,

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seven tacos. Like, the gourmet tacos. Like, whole

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bag of food, man. Yeah, like a chalupa and, you know,

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mexican pizza. Get down with it.

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So, yeah, it's. It's just

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gotten crazy out there. It really has the $20 taco bell

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orders. Just nuts. But, yeah, you know, it's something. It's

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something that, you know, honestly, we haven't really had to deal much

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with in the last 15 years at all.

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Something we've really never talked great lengths

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during financial planning meetings. Hey, you got to prepare for inflation, things

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like that. So it's definitely a newer

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risk. So it's something you have to plan for. And

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if prices continue in this direction, hopefully the

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inflation slows down a little bit here. But we really still

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haven't seen price decreases.

9:20

We still see that 3.2 to

9:22

3.6% inflation rate every month, it

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seems. So something that's just not going to go away. So something that we do

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have to plan for and, you know, it has to. You have to adjust not

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only your whole plan, but your investment strategy. You know, lots of things need to.

9:37

Need to adjust to account for that. So, I mean, so just to get back

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on the food thing, I mean, do you really think that, like,

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red lobster went out of business because of the endless shrimp

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thing that they had? Like. Like, that's what they said. Like, hey, we had to

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file bankruptcy because, like, we ate all the.

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Buried us on the shrimp. I don't know. I believe it. I

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mean, why don't you just get. Rid of that stupid promo? Like,

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you could end it at any time or something. I don't know. It checks out.

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You think so? I don't. I don't know, man. Maybe I'm.

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Maybe I'm crazy. Anyway, I think they were losing money on a lot of those

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tables. All right, all right.

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Well, you know, inflation. Something

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you definitely have to keep an eye on. As we've been talking about, if you're.

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If you're doing your financial plan on your own, you got to account for it.

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If you're, you know, working with your advisor

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and, you know, maybe it makes sense to increase it to 4%, you

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know, see how your plan reacts. Maybe that's like a what if

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scenario. Yep. Maybe not a base case,

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but just know that, you know, again, at the end of the

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day, I talked about it on maybe one of the other shows is like,

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you know, right now, 5% interest rate on cds and things

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like that are great headline numbers, but they're really, at the end of the

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day, you're not really chugging ahead. Nope. You know, you have to be

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diversified. Unfortunately, you have to be involved in the market because

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that is, at the end of the day, the ultimate inflation hedge,

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historically. So, yep, excellent points

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there and thanks everyone for listening this week.

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As always, if you have any questions or comments or show ideas,

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send us an email to info connect.com

11:25

and we'll talk to you next time. The opinions expressed

11:29

in the podcast are for general informational purposes only and are

11:33

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11:37

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11:41

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11:44

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