Dunham & Associates Investment Counsel Inc. executive vice president Salvatore Capizzi joins Wealth! to discuss why he believes financial planning has a “retirement investment paradox.”
“We have to recognize we are living longer, and it is not uncommon to believe now that we will be living into our hundreds, into 110 and 130 years old,” Capizzi tells Yahoo Finance. With longer lifespans and higher quality of life, financial planning begins to change.
As the Federal Reserve eyes a 2% inflation rate, he explains, “Start compounding 2% inflation over a 40-year retirement or 50-year retirement. All of a sudden, you have a completely different picture.”
While equities have been a way for retirees to traditionally “beat inflation,” Capizzi says that the paradox lies in the fact that equities will likely cause a sequence risk in your portfolio, which could damage overall returns.
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This post was written by Melanie Riehl
