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The Financial “Silent Killer”

The Financial “Silent Killer”

June 04, 2024

“Investing is scary.”  This is a common thread, in my experience, working with hundreds of people as they prepare and save for retirement.  Why invest in something I don’t fully understand, when I can have a guaranteed interest return on my money?  Of course, the challenge we all face is that we don’t know how long we will need our savings to last.  Here in lies the crux of retirement planning, how best to have our savings last throughout our and our spouses’ lifetime.

 We are all products of our experiences.   This is true of investing as well.   The fear of investing for the long term could be the result of different reasons.  Some savers may have had parents who lived through the great depression and experienced the great stock market crash of 1929 and the aftermath of that.  I remember my grandfather.  He lost everything.  He told me stories of hunting rabbits.  Having rabbit stew and selling the pelts to get by.  Parents like my grandfather impressed upon their children that the bank was really the only safe place to invest. 

Some may have saved and saw their account values drop at different US or world events as during the tech bubble burst of 2000-2001 or the financial crisis of 2008-2009.  Some savers decided this was too stressful as they worried watching their retirement accounts drop.  After all, don’t we all have enough to worry about already?   I recall a client friend of mine who ran a governmental water district.  Every year, when I reviewed his account during that “lost decade” of 2000-2010, he would often see the amount he invested was more than the actual value of the account.  He was frustrated.  Finally, after all of these years, he said “enough”.  He stayed in the Fixed account for the remainder of his career.  The equity market went on a 12-year positive run from there.  Fortunately, he had a very nice governmental pension and some additional savings, so he was able to make the decision to minimize his equity investing.   He only lived a couple years after retirement, so we will not know if this was the correct response.  Our challenge, again, is we do not know how long we will need to have our money last.

Finally, investing can be scary to some due to the fact that we don’t have access to our investments on a daily basis.  We are bombarded by the media, whose job it is to create headlines and sell advertising. For those who don’t follow their online investments or review their accounts daily, the news is unsettling, and we assume our accounts are dropping BEFORE we receive our quarterly statements.  Within that quarter, there are typically both good times AND bad times.  We don’t hear from the media as loud when there’s good days.  Reality is, if we are investing correctly, the equity market news is only PART of the story.  Our clients are diversified in many types of investments, so their quarterly reports may look a little different than simply what the S&P 500* has done that quarter.  The quarterly review can help illustrate both the good equity investing days and the bad equity investing days.  


Yes, investing can be scary, but I would venture to say that running out of money before you run out of life can be even scarier.  Running out of money and having to rely on our children or the government is not a good plan, especially when it could have been prevented, by educated investing. 

If we KNEW when we were going to pass, saving for retirement and the future would be much easier.  After we accounted for some potential health challenges, we could simply divide our assets by the number of years we have to live, know how much to withdraw monthly, and therefore, how best to spend our money.  We would know EXACTLY how to invest and how to enjoy the rest of our lives.  But, alas, we DON’T know how long we will live.  With health care advances, we ARE living longer so that adds more years our savings will have to last us.  We WANT to, as the old adage suggests, die broke and leave enough money to bury us.  Again, here in, lies the biggest challenge. 

My grandfather passed away in 1989.   He was 67 years old.  He retired at 65 because that was the age Social Security told him to retire.  He lived 2 years into retirement.   However, my grandmother, his widow, lived to 92.  Yes, she lived another 25 years.   She received his higher social security income, but he really did not save what he needed to take care of his bride.  She lived 27 years into retirement.  This experience has helped shape my mission.  We need to make sure that the spouse who primarily relies on their spouse for income, are taken care of.  We can do this, with proper planning and investing.


My grandfather, while he saved in the bank, he forgot about the FINANCIAL “silent killer”.  With all due respect to heart disease, the silent killer on the retirement saving side is INFLATION.  Yes, inflation was quite silent for decades until 2 years ago.  Inflation was running a little more than 2% just a few years ago.  It is certainly in the news as the Federal Reserve plays peek a boo with interest rate hikes and cuts to control inflation.  Taking the current environment out of the equation, inflation (as measured by Consumer Price Index, based on BLSFactSet, JPMorgan AssetManagement) has averaged 3.9% over the last 50 years. 

Because of this, our purchasing power erodes over time.  One common way to illustrate this is the “Rule of 72”. How does this work?   Let’s assume we have a lump sum of money invested and we are not adding any additional money.  Let’s also assume we can earn a 6% average on this investment over time.  Dividing 6 into 72 yields 12.  This means, this lump sum will double every 12 years.  If we can earn 8%, doubles every 9 years, if we earn 3%, doubles every 24 years.  With that same “Rule of 72” concept, we can apply this towards inflation.  If inflation averages 3%, and we divide 3% into 72, the result is 24.  This means that 24 years into retirement, our purchasing power ERODES by 50%.  Another way of saying this, is what you can buy now for $3.50 (cup of coffee), would cost you $7.00 in 24 years.  You can see how inflation will take its toll on your savings. 

My father-in-law will turn 90 in a month.  We are proud of him.  He has worked hard to stay healthy.  He is a retired elementary school teacher.  When he retired at the age of 58, his pension and his savings were more than enough to move him to a new town, cover a new mortgage and the medical costs moving him into retirement.  Now, 32 years later, he has been retired longer than he actually was a school teacher.  While he is getting by, it is nearly not as comfortable as it once was.  How many other 85-95 year olds, who were uncomfortable investing in the market, are now worried about the power bill or paying for their medication?  How many are spouses (mostly women) who have outlived their partners? 

Investing is simple, but not easy.  If it was easy, more would do it.  Take the time to not only review where you are, but where you will be.  Talk to a professional and get a second opinion.   Don’t be the person who thinks they will not live until they are 90 and are still kicking around at 95 thinking “what if”.  Play the “what if’s” now. 


*S&P 500 Index is considered a reflection of the large capitalization U.S. stock market.  It is the benchmark against which judging the overall performance of money management is used.

 Mike Lockwood (CA Insurance License #0730158) is a registered representative of Lincoln Financial Advisors Corp. Securities and investment advisory services offered through Lincoln Financial Advisors Corp. a broker/dealer (member SIPC) and registered investment advisor. Insurance offered through Lincoln Marketing and Insurance Agency, LLC and Lincoln Associates Insurance Agency, Inc. and other fine companies. 17400 Laguna Canyon Road, Suite 125, Irvine, CA 92618, Phone: (949) 341-4277. Lincoln Financial Advisors Corp and its representatives do not offer tax or legal advice.  Individuals should consult their tax or legal professionals regarding their specific circumstances. Oakwood Wealth Partners is not an affiliate of Lincoln Financial Advisors Corp. CRN-6655678-052924