Just when things felt like they were settling down, tensions with Iran flared back up last week. Oil prices and bond yields ticked higher after renewed strikes were reported, and markets took a bit of a stumble.

Markets were sitting near all-time highs going into this, so we had some cushion to absorb the hit. So far, oil hasn’t moved dramatically, and stocks have mostly bounced back.

This new round of conflict makes it far less likely we’ll see interest rate cuts this year. And rate hikes aren’t off the table either. That could mean higher borrowing costs and continued volatility in the months ahead.

In The News

New Fed Chair Kevin Warsh Is Squarely Focused on Inflation. Get Set For Interest Rates to Stay High

Investopedia highlights:

• New Federal Reserve Chair Kevin Warsh has officially ended the practice of “forward guidance,” refusing to give markets clues about future interest rate moves.
• Warsh emphasized that the Fed is “unambiguously” committed to returning inflation to its 2% target.
• Inflation has reached 4% due to energy disruptions caused by the ongoing war in Iran.
• Market traders now see an 83% probability that the Fed will hike interest rates at least once before the end of the year.
• There has been a “hawkish shift” among Fed policymakers, with many now projecting rate hikes instead of the cuts they expected months ago.
• Warsh is reviving an older strategy used by Alan Greenspan to maintain Fed flexibility by keeping the markets guessing.
• Bond markets reacted to the news immediately, with Treasury yields rising as investors prepared for potential rate hikes.

Inflation Is Forcing Americans to Rethink Retirement

The US News article highlights:

• Inflation is hurting retirement plans in three ways at once: higher spending, higher tax or Medicare costs, and lower real investment growth.
• Many retirees have to withdraw more money from savings just to cover everyday expenses.
• Larger withdrawals can push retirees into higher taxes or trigger higher Medicare premiums.
• Inflation also reduces how much buying power retirement savings will have in the future.
• Even a small drop in real returns can significantly slow long-term portfolio growth.
• Many Americans now fear running out of money in retirement more than death.
• Wage growth has not kept up with rising consumer prices.
• Basic living costs like electricity and gasoline have risen sharply.
• Pre-retirees may need to avoid becoming too conservative if they still have time for long-term growth.
• Retirees may need a more thoughtful withdrawal strategy to avoid selling investments at the wrong time.
• Some retirees are working longer or taking part-time jobs, but that can affect Social Security or Medicare costs.
• Inflation requires active planning, not passive hope.

Monthly Costs for Retirees: What Americans 65 and Older Spend on Housing, Food, Transportation, and Healthcare

This Investopedia article highlights:

• Americans age 65 and older spent about $5,120 per month on average in 2024.
• That adds up to about $61,432 per year.
• Housing was the biggest expense category for retirees.
• Retirees spent about $22,193 per year on housing.
• That works out to about $1,849 per month for housing costs.
• Transportation was the second-biggest expense category.
• Retirees spent about $9,538 per year on transportation.
• Food cost retirees about $7,940 per year on average.
• Healthcare cost retirees about $7,799 per year on average.
• Retirees spent about $5,107 per year on health insurance alone.
• The article says retirees also spend money on things like entertainment, hobbies, travel, pets, and charitable giving.
• The main point is that retirement planning should account for both essential monthly costs and lifestyle spending.

Having a retirement plan that accounts for inflation, market volatility, and your lifestyle is key to having confidence and security in retirement. If you have questions, just let us know!

Just for Fun

Dad Joke of the Week:

What’s the best way to save your dad jokes? In a dadda-base.

This Week in History

1881 – Sitting Bull surrenders

1908- FBI founded

1945- Winston Churchill resigns

1973- Actor and martial arts expert Bruce Lee Dies at age 32

2011- NASA’s final space shuttle mission comes to an end

What Did it Cost? (once of gold)

1920- $20.63

1950- $35.00

2000- $263.80

2026- $4,122.50