Joe Brown

Brown Advisory Group, LLC

Where Will You Be in 10 Years?

How time flies! It seems such a short while ago that it was 2004.

George w. Bush was starting his 2nd term, "The Lord Of The Rings: Return of The King," which won Best Picture in Hollywood, "Live Like You Were Dying" was the top Country single, and American Idol was the # 1 most watched show in America!Do you remember that in June of 2004, the average price of gasoline in the US was $1.92 a gallon? And we thought THAT was outrageous!Coffee that month was $2.75 a pound, eggs $1.31 a dozen, and bread $.98 a loaf. Our government tracks the cost of goods and reports it as the Consumer Price Index (CPI). This figure is how we base our inflation rate and determine the purchasing price of goods and services. What is strange about the CPI and our government's approach is the sectors they omit in the calculation. Energy costs and food are not included in the calculations.We can blame the government for that omission; under the Reagan Administration, food costs were omitted. Under the Clinton Administration, fuel costs were added to the categories not included in calculating inflation. To me, that seems strange; the two things that are the most volatile to our budgets are not worthy of government tracking.One thing is sure: Prices, taxes, and health care costs are NOT going down; they never have and never will. Of course, that wouldn't preclude the government from freezing the prices on a specific category, such as fuel. If the most recent war in the Middle East causes fuel expenses to soar, the government may have to step in to protect our economy. Has that ever happened? Indeed it has; under Abraham Lincoln, Franklin Roosevelt, and Richard Nixon, many prices for goods were frozen.When you look into your crystal ball, where do you want to be in 10 years? Do you plan to be retired? Still working at a job you love or hate? As we look into the future, the question is:  WILL you have enough money in retirement, and is your retirement account sustainable?A recent report about Baby Boomers found the five things most are concerned about.
  1. Having a catastrophic event that invades retirement funds
  2. Outliving  retirement funds
  3. Government not fulfilling obligations
  4. Not having enough funds to begin retirement
  5. Current interest rates do not provide a sufficient return, forcing to add risk to an investment philosophy.
How can you be sure you will have enough retirement income? That's the real challenge, which is far more complicated than it initially seems. The reasons are myriad, but the two most visible issues are the most apparent, medical costs and overall inflation. A recent US Department of Labor report stated that Medicare supplemental insurance has nearly doubled since 1990.Inflation during the same period (1990-2014) averaged 2.88% annually, meaning a prescription costing $20 in 1990 would now be $36.60. Over time, inflation and the cost of essential life goods can strongly affect any fixed-income retirement account. This naturally costs more over time, but a fixed income means fixed.Do you leave your retirement to chance? To hope and pray? The answer, of course, is obvious, planning is essential. Over the last ten years, the Financial Services industry has identified Income Planning as the most important and needed planning for the Baby Boomer generation. Fortunately, financial advisors now specialize in "Retirement Financial Planning," specifically Income Planning.Instead of looking at your funds as the need for financial planning, consider retirement financial planning. In simpler terms, how much income can you generate from your accounts while reducing risk and protecting yourself from inflation concerns? Believe it or not, planning with a focus on income is available and very possible.Over the past ten years, new products have been designed for income, guaranteeing payment for as long as you live, regardless of how long you live. The concept is simple you allow a larger entity to accept the responsibility for the performance of your basic retirement income while simultaneously providing reliable guarantees.Retirement Income Planning might be your answer to concerns about income, inflation, and enjoyable solid retirement.
Joe Brown picture

Joe Brown

Brown Advisory Group, LLC

2445 Darwin Rd.

Suite 105

Madison, Wisconsin 53704

(608) 241-4425

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