Deflation Risk & Your Final Frontier

by Mike Lester

Dec 6, 2021

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Speaker 1 (00:02):

Welcome to the Retirement Wealth podcast. Our goal is to help those retired or soon to be retired investors make more informed financial decisions and live an enjoyable retirement. Our host Mike Lester is the founder and CEO of Talon Wealth Management. Mike is an investment advisor representative of Retirement Wealth Advisors, Inc. An SEC Registered investment advisor. Thanks for joining us today and let’s get started.

Speaker 2 (00:31):

Like I know that you personally are not excited about social media, but are your kids into TikTok? because, most kids are.

Mike Lester (00:40):

You’re right. I’m not excited about it, but it is part of life today. So we have some Facebook stuff out there,

Speaker 2 (00:46):

Mm-hmm (affirmative)

Mike Lester (00:46):

but when you get to TikTok, yeah no, not so much. I think radio is a really good format for us. I don’t like to put myself out there.

Speaker 2 (00:55):

Nobody wants to see what we look like.

Mike Lester (00:56):

No, yeah. Not so much. Yeah. The kids are into it. I think about Luke. So Luke is nine, probably the kids at school are talking about it. I’m not exactly sure what a social influencer is, but I’ve heard what one is. And he’s told me how much money he’s going to make for the family.

Speaker 2 (01:12):


Mike Lester (01:12):

If I will get him a YouTube account so he can post videos, which is alarming a bit. Right? So that as a parent, you’re going well, I don’t really like the direction this whole thing’s going, but then I like the creativity.

Speaker 2 (01:25):

Mm-hmm (affirmative)

Mike Lester (01:26):

[inaudible 00:01:26] So [bottom line 00:01:27], he does not have a way to post anything, but he is very aware of TikTok, in fact, I guess this is kind of a good thing about TikTok. He came to me just the other day and he said, Hey dad, did you know that on a penny?

Mike Lester (01:40):

If the, A and the M are touching on the United States of America part that penny might be worth, he says $20,000. I said, what?

Speaker 2 (01:48):


Mike Lester (01:49):

Yeah. So of course I get home and I Google it like, is this even true? And, there is some truth to this. So I’m sure we have listeners who know this. I just didn’t know this who are coin collectors or something. But I guess there was an issue you with the stamp, in the process,

Speaker 2 (02:05):


Mike Lester (02:05):

I mean, there are certain pennies. And, obviously if there’s a defect in it, there are worth some money. So I turned that into some fun with the boys.

Speaker 2 (02:15):

Mm-hmm (affirmative)

Mike Lester (02:15):

And we went and found every penny in the house so we could possibly find and got out a magnifying glass and looked at it to see if they were touching. But I’m not big on TikTok, but, [crosstalk 00:02:24] I have learned something about pennies.

Speaker 2 (02:26):

I was going to say, he learned this from watching things on TikTok or YouTube or something. Obviously.

Mike Lester (02:30):

He did. Yeah, it was TikTok. Yeah.

Speaker 2 (02:32):

Makes sense. Because TikTok says it now has more than one billion, monthly active users. It’s the rare social media platform. That’s not owned by Facebook or Google, to have an audience of that size. I am not on TikTok. I have so many other things to do. What’s sad though Mike, is that a friend of mine the other day said, let me send you this news story I saw, you’re really going to be interested in it. Okay. So she texted to me, it was somebody on TikTok. That’s not where you get your news folks. Come On.

Mike Lester (03:00):

Yeah. News from Facebook, TikTok, YouTube, that kind of thing is that’s not news.

Speaker 2 (03:04):

But here on this show, we talk about what’s happening in the news and in your day to day life and how it could affect you financially and you just heard an Alexa alert from my studio. Sorry about that. See, that’s how up to date we are here. Whether it’s meme, stocks, crypto, price swings, or crackdowns in China, arguing in DC, all these things are a risk that investors are continuing to face and continue to grow. Bloomberg wealth asked Ark Invest, CEO and founder, Cathie Wood. What she believes is the next big risk for investors over the next 5 to 10 years.

Cathie Wood (03:40):

Some are going to be disarmed that there’s someone out there thinking deflation is a risk because no one’s positioned for it.

Speaker 2 (03:49):

Now I knew inflation was a risk, but is deflation something we genuinely need to prepare for?

Mike Lester (03:55):

There’s been so much talk about inflation because it’s tangible right now for us and our economy when we go out and things cost more, we start worrying about our purchasing power over time. And that’s inflation.

Mike Lester (04:06):

If, our income or our returns on our portfolio remain constant, but the price of things continue to go up. Then our purchasing power moving forward declines, and that’s a concern. But, deflation is, I think it’s a very legitimate concern, based on everything that’s going on. So for those of us who aren’t real familiar with deflation, basically, it’s a decline in the prices for goods and services. So, instead of that price going up, the price is going down and that might sound like a good thing on the surface, but deflation a lot of times can be actually more damaging than inflation. And it’s usually associated with a contraction in the supply of money and credit in the economy.

Mike Lester (04:46):

So, if the supply of money, meaning the federal government starts to raise interest rates and they make money harder to get. So there’s a contraction there that, becomes an issue because if, companies aren’t investing in themselves, if individuals aren’t borrowing money to buy homes, borrowing money to buy cars.

Mike Lester (05:06):

The economy gets worse and worse and worse. And if the credit in the economy is getting worse, that’s a problem. So just like we don’t want too much inflation. We also don’t want deflation. And my concern here is inflation’s been in the news quite a bit. They’re not talking deflation, they’re both problematic and that’s why the government tries to maintain a balance. And they do that with the money supply. So if they make it easier to get money, it’s because they’re worried about the economy slowing down. If they restrict the money too much, or they restrict the money, they’re worried about the economy heating out too much.

Mike Lester (05:39):

So there’s this balancing act with the fed, to try to keep us in the middle. And inflation are problem, deflation are problem. I do have a concern that deflation is potentially a problem because a lot of what’s going on right now with the economy seems temporary. So things are costing more right now because the government’s been pumping lots of money into the economy. And it’s very, very easy to spend free money.

Speaker 2 (06:04):


Mike Lester (06:04):

The money that was given to you. And so that can raise the price, but now we’re looking at well, is there going to be another stimulus? Is there not going to be another stimulus? Where’s it going to come from?

Mike Lester (06:13):

Are people actually going to go back to work or are they going to not go back to of work? Was it kind of going to look like. Inflation isn’t necessarily going to be a long term issue. If people aren’t working and spending money, we could be dealing with deflation and, if you’re not taking all of this into consideration, moving forward, if you’re in your late 50s, early 60s, you’re retired or considering retirement, these could all be problems and, you have to position your portfolio accordingly because inflation can be a problem for the stock market. Certainly deflation can be a problem for the stock market.

Mike Lester (06:45):

If there’s a decline in the prices for goods and services, that doesn’t help companies either, right?

Mike Lester (06:51):

If it’s rising too fast, it doesn’t help companies. And again, companies that you’re investing in. And if it’s declining that doesn’t help companies you’re investing in. So finding a balance somewhere in there and finding a way to try to navigate and again, there is no crystal ball, but being smarter about investing and being very active with the management of your portfolio, particularly if you’re retired or close to it, is going to be real important. I think moving forward because, we’re not in this sort of 80s and 90s bull market where things just kept going up for 20 years and you really didn’t have to worry about much of anything you just invested and you made money.

Mike Lester (07:26):

We’re getting into a lot of back and forth and you can’t afford to be out of the market completely all the time because there’s, isn’t a fixed option that makes you enough money, but you can’t afford to just commit, hang in there either. And some in there’s a balance, [Kristen 00:07:39] . And when we sit down and talk with individuals, those are the conversations we’re having.

Speaker 2 (07:44):

You’ve probably heard people talk about the great resignation that’s happening in the job market. You certainly feel it when you go somewhere trying to seek goods and services. Yahoo money says one recent survey found almost four in five boomers, said they would rather retire at age 65 and modestly live out their years than work until 75 and live large. Now, Mike, you work mainly with folks that are in their late 50s and up. Are any of them looking to move up their retirement date at all?

Mike Lester (08:15):

Well, I don’t like surveys, Kristen, because we never really know. I mean, who are they calling.

Speaker 2 (08:19):

Valid. I don’t know

Mike Lester (08:19):

Put in context. Well, put it in context, if you called me up and I’m 47. So if you called me up and said, would you rather retire at 65 or 75? I’d say 65. If you called me at 65 and asked me if I’d rather retire at 65 or 75, I would say 65, unless I just really, really love my job.

Mike Lester (08:39):

And there’s absolutely nothing wrong with wanting to retire and then enjoy retirement in that situation. So I think the numbers are skewed a little bit there, but when I sit down and I talk to people, a couple or individual is looking to move the retirement date up. The question is usually, Hey listen, we were listening to your radio show or I was listening to your radio show.

Mike Lester (09:02):

I heard about your complete financial plan seemed like if I came and sat down with you. You could do an analysis of my current portfolio, you could take a look at my expenses, you could tell me whether or not I could have afford to retire right now. And then I could take that information and decide for myself whether or not that’s what I want to go ahead and do.

Mike Lester (09:21):

And so we do get that phone call quite a bit and we do sit with individuals in that situation quite a bit. And it’s the kind of information I really enjoy, just sharing with people because it’s very, very difficult and we realize this Kristen and it’s very, very difficult to make that transition from going to work, getting paid, having healthcare, making contributions to retirement plan and knowing exactly how your bills are going to be paid month after month, year after year.

Mike Lester (09:47):

It’s very different to sort of separate from that situation, have to pay for your own healthcare, be pulling money out of your investments, as opposed to putting money into your investments, nodding my paycheck every month and living off of your portfolio for the rest of your life. And the idea is, well, will this money last for the rest of my life? And how long am I going to live? And nobody knows that, right? So it has to be regardless of how long I live, the money has to, last for the rest of my life.

Mike Lester (10:15):

Then it becomes well in order for it to last, how do I need to invest? Because if you could just go to the bank and get 8% on a CD, it’s kind of an easy question. You could go home and do the math for yourself and go, well, Hey listen, maybe I’ve got a million dollars set aside for retirement.

Mike Lester (10:30):

And again, Kristen, not everybody has a million dollars, but it’s a round number. If I could get 8% on a CD, 8% of a million dollars is $80,000 a year. I know what my social security’s going to be. Maybe I have a pension, maybe I don’t people can do the math for themselves and it makes sense.

Mike Lester (10:44):

What doesn’t make sense is, well, there aren’t any CDs paying 8% at this point in time. I don’t think there will be in the future. So what are the investment options available to help me be successful in retirement? And we would just define that as maintaining your current standard of living throughout retirement, adjusted for inflation and taxes. And that’s what a complete financial plan can help people do.

Speaker 2 (11:07):

If nothing else better understand where you are right now, what your options are and what’s possible in the future for you, and your family. Connect anytime at Well, William Shatner has decided

William Shatner (11:21):

The boldly go where no man has gone before.

Speaker 2 (11:22):

Well, at least no 90 year old man has gone there. Shatner taking one of the 15 minute flights into space, courtesy of blue origin, making him the oldest person to ever be launched into space, way to go Captain Kirk, he loves attention too. So he’s all over this for sure but, what’s one of the coolest things over the years, Mike, that you’ve seen one of your clients do, that’s outside of their comfort zone in retirement.

Mike Lester (11:54):

I’ve been doing this a long time. So 20 something years now. And I don’t know that there is a coolest [per se 00:11:59] and maybe this goes along with Shatner and flight and stuff like that. But I have a client who, gosh, he’s mid 80s and still flies as an [Acrobarrel 00:12:11] pilot, you know that the [crosstalk 00:12:13] acrobats and stuff and, and the plane rolls, it’s just really, really fantastic. So he still does the Sun shows and that one really, really jumps out for me. You know, it’s not necessarily the coolest thing.

Speaker 2 (12:23):

I don’t Know. That’s kind of cool, to be in your 80s and still doing that. And then you’ve also got to be able to financially afford the insurance for that and afford the fuel and the planing for that. So there’s a lot, that’s really neat about him doing that for fun.

Mike Lester (12:38):

He has the confidence in his financial planning to be able to continue to do it. Obviously it’s not an inexpensive hobby. If I could do barrel rolls at 85,

Speaker 2 (12:48):

I would do it.

Mike Lester (12:50):

In a high speed plane. I guess I’d it up for that. But yeah, I think that’s, we should all be able to do whatever it is we want to do in retirement and just be confident that financially we’ll be able to afford it.

Speaker 2 (13:01):

Wasn’t it? The first president Bush, that up until he passed away, he jumped out of an airplane every year on his birthday. I think, something cool like that.

Mike Lester (13:08):

[crosstalk 00:13:08] I don’t know, it was every year, but he did it.

Speaker 2 (13:09):

Yeah. And that’s so neat, when you’re retired, whatever it is that you want to do, you’ve got the time, freedom to do that, but you need to have the fiscal freedom to do that. And planning is how you get there.

Speaker 1 (13:22):

If you would like to have a comprehensive financial plan and an analysis of your current portfolio, go ahead and visit our website at And we can do that for you complimentary

Speaker 1 (13:38):

Thanks so much for joining us on today’s show. Be sure to subscribe to our podcast, visit our website at for more free retirement planning and investment resources. Thanks for tuning in to today’s show. And we’ll see you next time on the retirement wealth podcast, exposure to ideas and financial vehicles discussed should not be considered investment advice or recommendation to buy or sell any financial vehicle.

Speaker 1 (14:04):

This information should not be considered tax or legal advice. Individuals should consult with professionals specializing in the fields of tax, legal, accounting or investments regarding the applicability of this information to their situation. Past performance is not a guarantee of future results. Investments may fluctuate, and when redeemed may be worth more or less than originally invested.

Mike Lester

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Deflation Risk & Your Final Frontier