Sunday October 9th marks World Post Day, recognizing postal services around the globe.  Most of our communications today have moved electronically to phones and computers.  Where would we be without text messaging and email?  Yet, receiving a birthday card is still possible via old fashion mail.

Here’s a look back on the rising cost of a stamp to send a handwritten note:

  • 1973 10 cents
  • 1981 20 cents
  • 1995 32 cents
  • 2009 44 cents
  • 2022 60 cents

Stamps aren’t the only item that have risen in cost over the years.  Just about everything we use and consume these days costs more than it used to.  Stamps offer an easy relatable way to understanding the rising costs of life taking place around us.

Continuing to send cards to family and friends will require a different approach to managing income and investments.  Sustainability becomes an important theme, while working or retired, in stretching what you own.  Granted, most readers can stomach the increased cost of stamps, either from cash flow or current income.  But what happens when we substitute stamps for other essential and discretionary expenses that are important?  Does our plan continue to work?

It’s important to recognize that it’s not volatility in price that should be capturing investors’ attention today.  Markets contract and expand, currently we’re contracting, and that’s not fun.  It’s all part of the investment cycle, for investments to expand they must periodically contract in value.  What’s critical is asking yourself are you investing in a manner that supports freedom in future spending?

Life will continue to be more expensive.  Shrinking company values don’t feel good now, what feels worse is the inability of your spending to keep pace with real life prices.  How can you avoid this from happening?  It’s starts by creating a financial plan that spotlights future spending.

Consider the 55-year-old couple today that wants to retire at 65 with $10,000 a month in spending.  Ten years from now at age 65, it will take roughly $12,500 +/- to buy the exact amount of stuff that $10k a month does today.  That monthly income should continue to increase each year as the couple ages through their 80s and 90s.  Some of their spending may be covered by Social Security when elected.  The rest may be covered by liquidating investments.  If that’s not enough perhaps one spouse will continue working, or maybe both will for a while.  Lowering the desired income may be possible, though this comes with tradeoffs.  Wouldn’t it be nice to know what’s necessary today to support spending tomorrow?

That’s the value in updating your financial plan each year.  Life is dynamic so a plan needs to reflect this consistent change.  When your investments report back to your goals, you can ignore what’s happening in the markets today.  Instead, you can focus on inputs you direct by selecting investments that may hedge rising costs.  Planning does not need to be more complex than this.  The key is following a repeatable process, remaining patient, and staying flexible.

If you are uncertain or have questions we’d be happy to chat with you Chat - with Ryanor Contact Ryan.

Advisory services through Cambridge Investment Research Advisors, Inc., a Registered Investment Advisor. Cambridge and Flowerstone Financial are not affiliated.

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