Health and Wealth Lessons for Retirement
by SGL Financial
Our 2 Cents – Episode #224
Health and Wealth Lessons for Retirement
What do you get when two amazing hosts break down the world of finance? A new episode of Our 2 Cents is back! Today, we’re diving into preparing for unexpected health costs, fun life tips, and giving you the latest inflation update. Listen in now—your future self will thank you!
- When a Health Crisis Hits:
- The Lewits uncover healthcare money moves and why preparing for the unexpected is essential in retirement.
- Fun Life Tidbits:
- 15 minutes a day of this exercise could boost your lifespan. Can you guess what it is?
- Think you know how to make perfect bacon? We reveal the secret.
- Inflation Update:
- Find out what the latest inflation data means for your finances and whether it should raise concerns about your retirement.
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Podcast Transcript
Announcer: You’re listening to Our 2 Cents with the team from SGL Financial, Building Wealth for Life. Steve Lewit is the President of SGL Financial, and Gabriel Lewit is the CEO. They’re here to discuss all the latest in financial news, trends, strategies, and more.
Gabriel Lewit: Well, welcome back everybody to Our 2 Cents. You’ve got a great duo here today. The same duo you always speak with here today, which is Gabriel and Steve Lewit. Are you going to say hello, Steve?
Steve Lewit: I’m trying to get my earpieces adjusted a little bit. You’re screaming in my ear.
Gabriel Lewit: Well, yeah. I wanted you to say hello.
Steve Lewit: Oh, good morning, everybody. Now that I can hear properly. Good morning, good morning.
Gabriel Lewit: Well, you did poor testing before the show then, because you had given a thumbs-up that you were good.
Steve Lewit: It was great, but then you know what happened? You got your announcer voice on and all of a sudden you were like 30 decibels higher. So…
Gabriel Lewit: Well, I did have somebody the other day tell me that they thought you sounded much quieter than me on the show. This is true.
Steve Lewit: Yeah.
Gabriel Lewit: So…
Steve Lewit: Yeah, you’ve got that kind of announcer…
Gabriel Lewit: You’ve got to speak into the mic, my man.
Steve Lewit: Quieter, was that a bad…
Gabriel Lewit: You’ve got to tilt this towards you. You’ve got to go…
Steve Lewit: Was that too quiet that I should be louder?
Gabriel Lewit: Well…
Steve Lewit: I can’t talk any louder than this. I can sing louder, but I can’t talk louder.
Gabriel Lewit: We’ll get our technical glitches figured out here, folks, eventually. But we hope you’re doing great. Right? We’ve got a good show I think lined up for you here today. It’s a great sunny day on the day here that we’re recording this. So, that’s all…
Steve Lewit: It’s a gorgeous day.
Gabriel Lewit: That’s all great. It’s almost September. Can you believe it?
Steve Lewit: Yes.
Gabriel Lewit: My kids are back to school.
Steve Lewit: Yes. My son just went back to college.
Gabriel Lewit: Well, yes.
Steve Lewit: Your brother.
Gabriel Lewit: Yes.
Steve Lewit: That’s your brother.
Gabriel Lewit: Correct.
Steve Lewit: My son.
Gabriel Lewit: My sons, my kids are starting soccer. So, lots of things are changing, lots of happenings in the air, and we hope you’re doing well of course. So, today we’re going to jump into a little bit more on, to start, health insurance options and health costs, and some of the challenges of this for retirees.
And this got spurred because there was some interesting follow-up questions from one of the topics on our prior shows, which was about the changes to the Affordable Care Act, and we had talked about how some of the subsidies are changing for that. Of course as a quick review, some of the costs are likely to go up. There were changes to the Affordable Care Act.
And we had some follow-up questions. “Well, what about healthcare in retirement?” Something I don’t think we’ve talked about for a little while on the show. So, we thought we would revisit that topic here today because it’s one of the biggest areas that people don’t plan for when it comes to their retirement.
Steve Lewit: Well, health crisis is something that hits you out of the blue and can be extraordinarily expensive. Fidelity estimates that without a health crisis, an average couple 65 years and over will spend almost $400,000 on healthcare. That’s insurance premiums and all that kind of stuff. And then if you add in an event like long-term care illness or something like that, that could cost you $200,000 or $300,000. That’s a half a million dollars that could disappear out of your savings really quick.
Gabriel Lewit: Well, it could. And so, the concept here is, number one, what do you have available to you for healthcare coverages? Right? What can you expect, what can you not expect? Do you really understand how it all works, what it covers, what it doesn’t? And then as you mentioned, there are things that can pop up out of the blue, crises if you want to call them that. How do you plan for those? What are they?
And I often like to say, because sometimes people when I talk about these things or just any unplanned expense in retirement, they say, “Well, how can I plan for them if they’re unplanned?” Well, I say, “That’s a great question.” Well, there’s only generally so many types of unplanned events that we could actually identify the majority of them, and then we can kind of run through them almost as a checklist and say, “What’s the likelihood of these things impacting you?” And then come up broadly speaking with a plan to handle one of those unpredictable events.
Steve Lewit: Exactly. It’s not that we can predict the event itself, but we can predict the cost of an event when it happens, like a range of costs. If you go into a long-term care facility, that could cost you $200,000, cost you $500,000 over your lifetime.
Gabriel Lewit: Yes. Well, to kick off on this, we had done a quiz on our last show. I don’t know how all you listeners out there scored or fared, but one of the questions, I’m not sure…
Steve Lewit: I did well.
Gabriel Lewit: You did great.
Steve Lewit: I did well.
Gabriel Lewit: One of the questions that maybe should have been on there is maybe around Medicare. What does that cover in retirement? Because a lot of people think Medicare covers everything.
Steve Lewit: Yeah, they do. It’s like, “Well, I’ve got Medicare. I’m set.” No, no, no, you’re not, really.
Gabriel Lewit: I feel like I might’ve referenced this on a show. But yeah, I had a client a couple of weeks ago that… I think it was a couple of weeks ago. It all blurs together here. But it was a younger person, and we were talking and she was shocked when I said that yeah, Medicare doesn’t cover everything. She was like, “What do you mean?”
Steve Lewit: “What do you mean?”
Gabriel Lewit: I said, “Well…”
Steve Lewit: That’s why we buy it.
Gabriel Lewit: She’s like, “I thought it just covers all your healthcare.” Well, so, no it doesn’t. Right? Medicare is complicated. It’s got different parts. It’s got part A, part B. There are Medicare Advantage plans. There’s called part C, and there’s part D for drug plans. But at the end of the day it doesn’t cover everything.
It doesn’t cover long-term care, as you mentioned, which we’ll get into. It doesn’t necessarily cover dental or vision. And because there’s so many different types of Medicare, it can sometimes get confusing. But the point of all of this, today’s not going to be a Medicare deep dive. It’s about understanding what might you have to pay out money for broadly speaking in retirement for healthcare, and making sure you’ve really got your arms wrapped around those things.
Steve Lewit: Yeah. So, even though it comes as a surprise or an emergency, your finances are prepared in some way to handle that.
Gabriel Lewit: Yes. So, let’s talk about these. Let’s just go with some basics for step one. In retirement we’re focusing on, you need to have health insurance, and in retirement that typically is going to be covered either by standard Medicare or a Medicare Advantage plan.
Steve Lewit: Yes.
Gabriel Lewit: Now, a Medicare Advantage plan is kind of a private version of Medicare that tries to bundle together a bunch of different things, and generally the downside of Medicare Advantage is that it has higher out-of-pocket costs. They actually try to incentivize you to join the plans by offering very attractive or free monthly premium payments.
Steve Lewit: Often free. They say, “Well, you can have this for free,” but you all know when you hear the word “free”, what do you normally say to yourself?
Gabriel Lewit: “Oh, there must be no catches.”
Steve Lewit: Right.
Gabriel Lewit: This is just the best…
Steve Lewit: Oh, thank you very much. I really appreciate that.
Gabriel Lewit: Yeah. So, what is the catch on a Medicare Advantage plan? The free premium, what could go wrong? Well, they have higher out-of-pocket expenses. Now, a maximum out-of-pocket means if you start getting a lot of care for X, Y, or Z health need, you have to start paying, maybe it’s a copay, or maybe it’s something over and above a deductible. Eventually you have to keep paying that until you reach a maximum out-of-pocket cost, which may be substantially higher on a Medicare Advantage plan than it may be on a, what we call standard Medicare plus Medicare supplement-type arrangement.
Steve Lewit: So, again, we don’t want to get into the details of that, but you still… Maybe we have to get in a little bit.
Gabriel Lewit: Just a little, just a little.
Steve Lewit: Yeah. You have to understand what’s going to pay and what’s not. A lot of people say, “Well, I’m going into a nursing home. My Medicare is going to pay that.” Well, no it’s not. It’ll pay I think 90 days, but it’s not going to pay for your nursing home care.
Gabriel Lewit: Yeah. So, you’ve got your premiums. You’ve got to pay those, and if you have Medicare, you’ll have a part B premium, and then you’ll have a supplement that you’ll pay a premium for. Or you go the Medicare Advantage route and then you have no premium per se or a very low premium, but you’re going to have other costs.
Now, that’s one piece. Okay? Somewhere along the way, though, Medicare Advantage, Medicare regular, you’ve got to have some extra money over and above just what you’re paying for the premiums because of these unexpected out-of-pockets or other things that arise. And even if you have at a healthcare event, I’m not even talking necessarily about the cost of the care or the medical procedure or whatever it is, right?
Steve Lewit: It could be the cost of a drug that’s not covered.
Gabriel Lewit: Exactly.
Steve Lewit: I have a client that’s paying… Well, they’re not paying it because they got a deal with the insurance company. The drug company makes deals with you. But this drug actually costs $40,000 per month.
Gabriel Lewit: And may not be covered by any of your plans.
Steve Lewit: And probably not because they find ways not to cover this stuff.
Gabriel Lewit: Yeah. So, that’s briefly shifting now into the drug plan portion of these, which for Medicare your Advantage plan has something called a formulary. If you take regular Medicare, you get a drug supplement, which also has a formulary.
Not every drug is covered by every plan’s formulary, and thus you may find yourself having to pay money out of pocket over and above what you thought you’d have to pay for premiums, etc. for these drugs. So, it’s important as I’m trying to summarize this that you have money set aside. This is where that Fidelity study was talking about you’ve got to have money available to pay for these things.
Steve Lewit: Exactly. Understand that these are expenses that are very, very likely to come. The $300,000 that Fidelity quoted is just for insurance premiums and just normal expenses, and then loaded on top of that could be anything.
Gabriel Lewit: Exactly. Okay. So, hopefully that makes sense. The other component of this, of course I mentioned briefly dental/vision sometimes is included as part of Medicare Advantage plans. It generally is not ever included as part of a regular Medicare supplement, so you’ve got to potentially pay for those as well, and dental plans don’t cover all your dental costs. Right?
Steve Lewit: There are no dental plans that cover… I love when I submit on my dental insurance and it says, “We paid $10 and you’re paying a thousand.”
Gabriel Lewit: So, you’ve got to again have money set aside for that. You’ve got to have money set aside for unexpected drug costs, unexpected out-of-pocket limits. So, when you plan for retirement, we of course are looking for all the various things you have to worry about that you may not be aware of. This ends up being one of those big things that we’ve got to factor into your savings, your reserves, your monthly expenditures.
And then that doesn’t really even come into what you were talking earlier into play, these crises which might be bigger events like long-term care type events where you can’t physically take care of yourself and you might need assisted living or what they call “adult daycare” or even a true long-term care facility…
Steve Lewit: Or home healthcare.
Gabriel Lewit: Or home healthcare, right. These are even bigger type of events that people don’t always have on their radar.
Steve Lewit: Definitely.
Gabriel Lewit: So, that’s really, I think what we wanted to cover here, folks, is again, we had focused on the Affordable Care Act, and we wanted to just round this out a little bit with what to expect in retirement for healthcare. But there’s a lot here to think through, and if we can help guide you through this, today again more of a high-level overview, not a deep dive on any one of these topics, let us know.
And we’re here to help you talk through this, budget for this, save for this. Just as you might when you’re in your younger years have an emergency fund, we could have a healthcare savings or emergency fund in retirement, or even just a long-term bucket that we don’t touch because we know we may need it for that purpose.
Steve Lewit: Yes.
Gabriel Lewit: That’s very common. There’s different ways we can plan for this.
Steve Lewit: Yeah. The thing is not to forget to plan for it. Because when you retire, the number one goal first for most people is, “Where do I get the income I need for retirement? Will my money last for retirement?” So, that’s the number one priority. Then the second is, “Okay, how do I invest my funds?” Then the third is, “How do I not pay any taxes?” And then comes, which is last or next to last or third from the last on the list, is healthcare, and often that gets left off the table and not addressed.
Gabriel Lewit: It does. Yep. And our goal is to make sure you have a comprehensive, holistic, well-mapped-out plan in all key areas, and we don’t want you to forget about that little but very big thing called unexpected healthcare costs.
Steve Lewit: Which we would all like to forget about, because nobody wants that.
Gabriel Lewit: Yes, yes. Now, what we’re going to do next here just for a fun little interlude, we’re going to give you the magic secret to eliminating your retirement healthcare costs.
Steve Lewit: And this is such a hidden treasure that I can’t wait to release it to the general…
Gabriel Lewit: The excitement is building here.
Steve Lewit: I can’t wait to release this to the general public here.
Gabriel Lewit: This is going to blow your mind.
Steve Lewit: Just blow your minds. Yes.
Gabriel Lewit: The headline here, okay, “15 minutes of this exercise may lower mortality risk by 19%,” new study says.
Steve Lewit: And make you feel better.
Gabriel Lewit: And have an especially large impact on heart health and heart health-related deaths. Do you know what this is? You’re never going to guess what this is.
Steve Lewit: I do. I bet everybody knows what this is.
Gabriel Lewit: What is it?
Steve Lewit: Well, you say it. You’ve got that announcer voice that I like.
Gabriel Lewit: All right, guys. Drum roll, drum roll.
Steve Lewit: All right, hear it is…
Gabriel Lewit: Well, they can’t hear that. “Brrrr…” Right? We’ve got walking.
Steve Lewit: Yes, folks. Walking is your key to longevity. Forget vitamins, forget eating well, forget, what else can we do there… Going to the spa. 15 minutes of walking every day is going to extend your life according to this study.
Gabriel Lewit: I think everyone has heard this before, but I think it bears repeating, right?
Steve Lewit: It does, it does.
Gabriel Lewit: How do you bring down your healthcare costs in retirement? Well, you get out there on a beautiful day like today and you walk.
Steve Lewit: Yes.
Gabriel Lewit: And in particular they were saying, and we’ll talk about some of the brief study points here… Because there was 85,000 participants age 40 to 79 from this cohort that was doing this study, and they found that fast walking was actually significantly linked to lower overall mortality while slow walking showed only a slight non-significant benefit.
Steve Lewit: Now, did they say what fast walking… What, like three miles per hour?
Gabriel Lewit: Oh, let’s see here. Yeah, that’s a good question. You’re stumping me here. I’m looking, looking…
Steve Lewit: Because four miles an hour is a pretty brisk walking pace. They just don’t-
Gabriel Lewit: Well, yeah, I would imagine fast might be relevant for you, right? If you have your normal walking pace, well, fast would be walking faster than that.
Steve Lewit: Yeah. It’s not a saunter. You don’t want to get out and saunter along. It has to be intentional. You want to walk speedily.
Gabriel Lewit: Speedily, yes.
Steve Lewit: Speedily along and just feel like you’re pushing yourself a little bit. Now, you might be in great shape or not in great shape, it doesn’t matter. 15 minutes out there, and folks, this is the real deal. Because I’ve read this research lots of times and…
Because I work out. You know, Gabriel, I work out almost every day, and I read about this stuff, and what’s good workouts and bad workouts, and what older people can do and younger people can do and all that stuff. Everybody, everybody says if you walk and get your heart rate up just a little bit, that is a longevity giver. It’s a giver of life to you. So, even if you’re not in great shape, folks, get out there and just start to, even if you can only walk at five minutes at a higher speed-
Gabriel Lewit: Fast walk.
Steve Lewit: Fast walk. Do some fast walking.
Gabriel Lewit: Yes, it’s fast walking. That’s it. Fast talking and then fast walking.
Steve Lewit: No, no, no. Fast talking is something else. That’s not longevity.
Gabriel Lewit: If you’re talking while fast walking, are you fast talking?
Steve Lewit: Well, no. Here’s what you can’t do…
Gabriel Lewit: That’s the question.
Steve Lewit: This is what drives me crazy. I see people walking fast, and they’re on the phone, and they’re on the phone while they’re walking. I’m saying, “What are you doing on the phone? You’re supposed to be relaxing.” And they’re like, arguing…
Gabriel Lewit: Well, hey, people are glued to that thing.
Steve Lewit: They’re arguing with somebody. “Oh, I don’t know why da da da,” and they’re walking. It’s like you’re getting aggravated while you’re walking. Why are you doing that?
Gabriel Lewit: Yes. Well, hopefully that one little tip, it does not cost you a lot of money, but might save you a lot of money in the long term with your healthcare costs.
Steve Lewit: And if anybody wants Gabriel’s autograph for bringing that tip to us today, just give them the number to write us and write in and get your autograph.
Gabriel Lewit: Yes, yes. Very, very important.
Steve Lewit: That was a real revelation. I love it.
Gabriel Lewit: Now, I just want to take two minutes to talk about one other very important non-financial thing, because we do of course try to give you some interesting life tidbits here as well as financial tidbits for the show. But this one may not help with your longevity.
Steve Lewit: No, this is ridiculous. Folks, we did the North Pole, now we’re doing the South Pole. How you combine these two articles together is totally beyond my consciousness.
Gabriel Lewit: I read this, and I said I’ve got to bring this up, right? But, “There’s seven ways of making bacon, and only one is the clear winner.”
Steve Lewit: I don’t know what to say. I’m flabber… Folks, after-
Gabriel Lewit: You never know what you’re going to get on the show, and I think that’s part of what makes it entertaining. Hopefully, right?
Steve Lewit: Well, no, I’ve got it mapped out. After you cook your bacon and the one greatest way to cook your bacon, then you go out for a walk.
Gabriel Lewit: There you go.
Steve Lewit: There you go.
Gabriel Lewit: I mean, no, you should not have bacon on probably even a daily basis. Okay? But there’s a couple different methods here. You can put them in the microwave. A quick spin around the microwave.
Steve Lewit: Horrible, horrible.
Gabriel Lewit: People do do that, okay.
Steve Lewit: No, no, they don’t. They don’t. Nobody does that.
Gabriel Lewit: But the study says the results of cooking bacon in the microwave simply put were not good.
Steve Lewit: Not good. No, it’s just awful.
Gabriel Lewit: Then you’ve got a long sous… How do you say this? Sous vide? Sous vide soak. A long sous vide soak. I’ve never heard of that one before, actually. That kind of was…
Steve Lewit: How do you spell that? Where is that?
Gabriel Lewit: It’s on page two. Okay.
Steve Lewit: Sous vide.
Gabriel Lewit: Now, you’ve got the most common approach is starting on a hot skillet. Okay? So, most people I think probably cook on a skillet. Grilling in a pan. I guess pan is close to a skillet, but a little bit different. You’ve got air-
Steve Lewit: That’s what I… I haven’t had bacon in years.
Gabriel Lewit: You’ve got air frying.
Steve Lewit: Air frying is the way I would go.
Gabriel Lewit: Now you’ve got cold skillet.
Steve Lewit: What is a cold… How can you have a cold…
Gabriel Lewit: You start cooking it before the skillet’s hot. You just throw the bacon on the cold pan and let it heat up versus starting it on a hot pan. And of course you’ve got baking bacon in the oven.
Steve Lewit: Yes.
Gabriel Lewit: Now, which of these… Because I don’t think you read this yet. Which do you think was the winner?
Steve Lewit: Well, I actually glanced.
Gabriel Lewit: Okay. You snuck a peek.
Steve Lewit: And I was really, really surprised that baking was the number one.
Gabriel Lewit: It is, and that’s pretty much just what we wanted to tell you. Baking your bacon…
Steve Lewit: Well, how do you bake bacon?
Gabriel Lewit: What do you mean how do you bake…
Steve Lewit: What temperature? How long?
Gabriel Lewit: Well, you do it for 25 to 30 minutes.
Steve Lewit: I’m not spending 30 minutes cooking bacon.
Gabriel Lewit: At 400 degrees Fahrenheit.
Steve Lewit: Nobody does… Who has time for this?
Gabriel Lewit: You could even prep this. Someone at night, leave a pan in the fridge.
Steve Lewit: I go to sleep. I have to set a timer on my oven to bake my bacon.
Gabriel Lewit: You put some aluminum foil, arrange 10 or whatever preferred number of slices, you bake until crispy about 22 to 25 minutes, and you can rotate the pan if you’d like. And it says it’s the absolute best way to cook evenly crispy and consistent bacon. Producer Katie, you cook a lot. What do you think? Is this a good way? She’s nodding her head yes.
Steve Lewit: You do this?
Gabriel Lewit: I think baking the bacon, that’s the way to do it.
Steve Lewit: Who has time to do this? You have three dogs. When do you have time to do this?
Gabriel Lewit: So, now you know. Now you know.
Steve Lewit: Now you know. Folks, you have the two largest pearls of wisdom, better than biblical: walking and bacon.
Gabriel Lewit: Baking the bacon.
Steve Lewit: That’s the take.
Gabriel Lewit: Honestly, I just wanted to say “baking the bacon”.
Steve Lewit: That has nothing to do with money.
Gabriel Lewit: “Making the bacon” has to do with…
Steve Lewit: Yeah, it does. But I hope you walk away today with those pearls of wisdom. Tuck them away, write them down, and make sure your kids inherit them.
Gabriel Lewit: Yes, indeed, indeed. Okay. Well, to continue onwards here, we wanted to give some updates on this world of inflation. Inflation has been not as much in the news of late. It’s been something, though, that has been in the news consistently here and there over the last year. Even the year prior it was probably on the news every single day it felt like, right?
Steve Lewit: Well, inflation was at 9%?
Gabriel Lewit: Yeah. So, people have sort of stopped maybe monitoring inflation as much, but it’s still a theme to be aware of. And new data came out that inflation was up 2.7% over the last trailing 12 months for the month ending July, which was pretty similar to what it was the month prior. And it’s still a little bit higher than generally you’d want to see. So…
Steve Lewit: Well, let’s be careful here, because it’s generally higher than the Fed would like to see it. But there are a lot of arguments out there saying the Fed’s 2% goal is really not reasonable. That the real rate is right where it is now, 2.7%, 3%.
Gabriel Lewit: Well, it doesn’t seem exceedingly high yet, but when it was higher in the past, the risk of course… What everybody really wants, what Trump wants is interest rates to come down. People are tired of paying 7% or 6.75% on their mortgages, people are tired of ultra-high borrowing costs. But they do like their interest on their bank accounts and CDs. I will say that.
Steve Lewit: You bet they do. You bet they do.
Gabriel Lewit: So, there’s a counterargument to that. But yeah, interest rates coming down is very closely linked. If you follow our show, we try to talk a lot about this in simple terms, right? Very closely linked to the inflationary environment, and the two are connected and can impact one another.
Steve Lewit: Yeah. If interest rates come down, people will invest more, there’s more money in circulation, there’s greater demand. If there’s greater demand, prices go up.
Gabriel Lewit: Yeah. And what was interesting and what prompted me to talk about this, other than just I think it’s been a bit since we’ve done a general update, there was a Charles Schwab study… Okay? Charles Schwab being one of the big biggest brokerage institutions out there saying that one of the number one obstacles people fear for saving for retirement is inflation still. This was very recent. This was just done a week ago, the study came out.
Steve Lewit: Well, especially there are pockets of very, very high inflation, like medical, food. There are different areas. We talk about 3%, 2.5% Percent. Oh, well, that’s great. But medical inflation is 6% to 8%. Certain food categories are 8% to 10%. And that’s where you go to McDonald’s… We’ve talked about this before. You go to Subway and it’s like, “How much is this? Did you add that correctly?”
Gabriel Lewit: Yeah. I actually did do a double-take just the other day at a fast food restaurant I went to. I was like, “What?” So, yeah, it sometimes just catches you off guard, right? But what’s happening is, why is inflation a concern for saving for retirement? Well, if everything else is getting more expensive, what might happen to your discretionary income? It goes down. And if it goes down, you may feel like you’re not capable of saving as much for retirement or otherwise, and it can be stressful feeling like it’s impacting you.
Steve Lewit: Yeah. Look, most of us are not wealthy enough not to watch our pennies. That’s just the fact. In fact, I think 60% or 65% of the country don’t have $400,000 in their emergency savings.
So, when you start facing these higher prices, it kind of sneaks up on you, Gabriel. It’s like, “Hey, why am I running short? Where did the money go?” And if you really look at your food costs or… Now, I happen to shop at Whole Foods, which I know is expensive and kind of ridiculous sometimes. But it’s the same in Whole Foods, it’s the same in Aldo, it’s the same in…
Gabriel Lewit: Aldo?
Steve Lewit: I don’t know.
Gabriel Lewit: Isn’t that the shoe company? You’re talking about Aldi.
Steve Lewit: Aldi, yeah.
Gabriel Lewit: Aldo is the shoe company in the mall.
Steve Lewit: Aldo, Aldi. “Aldo, Aldi, who knows what it is?” But where do people…
Gabriel Lewit: Or is that the thing where, “Where’s Aldo?” You trying to find him.
Steve Lewit: Where do you shop? What’s the…
Gabriel Lewit: I know it’s Where’s Waldo. I was joking.
Steve Lewit: Where?
Gabriel Lewit: Yeah, so, anyways. Wherever you shop, you’re probably seeing higher prices and it may feel like it’s impacting you.
Steve Lewit: I picked up a box of blueberries and it’s like, what? Are you kidding me?
Gabriel Lewit: Well, I went to the store the other day, and I meant to save this anecdote for this discussion next time we had it… So, there’s Mariano’s by me that’s closing, and I have no idea if this is just because it’s closing, and admittedly my wife usually does a little bit more of the grocery shopping than me and I haven’t been to a grocery store in a while.
But I was walking down the aisle because I just had to run over to grab some milk, and then I was going to buy some cereal for breakfast. This was the other weekend. And there were boxes of cereal, I think it was like Cheerios or something, $9.99. And I was like, “What? When did this $6 box of cereal become $10?” There was a lot of them, too. I was like, this is crazy. This is pretty crazy.
Steve Lewit: Yeah. And for the average person or the middle income, higher middle, lower middle income person, folks that are less well-off, I don’t know what they do. But it becomes a matter of how do we…
Gabriel Lewit: Well, they save less for retirement is what they do.
Steve Lewit: Well, they have a hard time just getting through the day because you can’t afford to buy good food. You can’t even afford to buy bad food.
Gabriel Lewit: Well, the goal obviously is to make sure that if inflation is impacting you, what can you do? Well, sometimes you can’t do a lot, but if there’s anything we can help you with from a planning perspective or if this is a concern for you like it is for many people out there, you let us know and we help you craft your plan. We walk through your savings.
Maybe you’re already on track for retirement, maybe you’re not. Once you know that, you can adjust things a little bit more, particularly for your plan, and make sure that you’re feeling as comfortable as you can with everything that’s going on right now price-wise.
Steve Lewit: Yeah. And Gabriel, the lingering question out there is, okay, if interest rates stay the same, they come down, what happens to the stock market? And we don’t know, really. The market has right now baked in interest rate deductions, which haven’t happened, and the market is still holding up pretty good. But lots of unknowns in the future.
Gabriel Lewit: Well, there is, and obviously just to round out this topic of interest rates, generally if the interest rate environment goes down, the typical correlation, folks, is if I can’t earn as much in CDs or a savings account, where do I typically want to put my money? Probably in the market, right? So, it can be a boost for the market’s performance.
But overinflated valuations… I was reading a quick article the other day that was measuring the price or the overpricedness, if you will, of the US stock market on a couple of different measures. There’s price to earnings and price to book ratios, and then there’s something called the CAPE, cyclically adjusted price to earnings ratios, and all of these things were at almost the highest they’ve ever been. The only time they’ve been this high before was before the dot-com crash.
Steve Lewit: Exactly. It’s pretty similar actually, right now.
Gabriel Lewit: And of course, there was a big frenzy before the dot-com crash about the future of the internet being a huge, big thing. There’s a lot of similarities right now. What’s propping up the market? All these big AI companies and the billions and billions and billions that have been invested in them, should that be considered a bubble or not? We’ve talked a little bit about that on the show and on previous market outlooks.
But I do think it’s a risk factor right now at the very least, right? We’ve got to pay attention to that. You shouldn’t be surprised if we see some pullbacks in the market at some point, although it can continue. People were saying that about the dot-com market for two years before it burst.
Steve Lewit: And then it burst over three years. The market went down three years in a row.
Gabriel Lewit: And there’s not a giant sign when it starts going the other way, right? It just can start and then it can just keep going. And bit by bit what happens is people say, “Why am I paying so much for this company that’s not making money?” Right? There can be some catalysts that start this, but it’s just something to keep in mind. And then of course as markets go down, interest rates typically go down to try to boost people to go back into the market.
Steve Lewit: To try and get them to go up. And then guess what you get?
Gabriel Lewit: Then you get a bull market after that.
Steve Lewit: And you get inflation.
Gabriel Lewit: Then you get inflation again, right. So, it’s all very cyclical.
Steve Lewit: And then interest rates go up again.
Gabriel Lewit: So, these things are very connected, the world of the interest rate environment and Federal Reserve policy. But that’s your update for today, right? We covered a lot of ground. Healthcare costs, to walking, to bacon, to the interest rates, to the stock market. So, there we have it. That’s our show for you today. If there’s any questions…
Steve Lewit: And our show wasn’t chopped liver today.
Gabriel Lewit: If there’s any questions that we can help answer for you, you give us a call anytime, (847) 499-3330, or go to our website, sglfinancial.com, and click “contact us”. Or you can always email us, info@sglfinancial.com. And as always, thank you so much for being a valued listener of ours. We appreciate it so much, and we are wishing you a wonderful rest of your day. And once again, go Bears. Even though it’s preseason, I’m optimistic for the year.
Steve Lewit: Oh, my, what should I say? Stay well, everybody. Enjoy.
Gabriel Lewit: Bye, guys.
Steve Lewit: Bye.
Announcer: Thanks for listening to Our 2 Cents with Steve and Gabriel Lewit. For any questions about your finances, give SGL a call at (847) 499-3330, or visit us on the web at sglfinancial.com, and be sure to subscribe to join us on next week’s episode.
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