Month: May 2026

While it is a uniquely enjoyable privilege to dally on a high mountain summit, every experienced climber knows the vast majority of mountaineering casualties occur on the descent and understands the need for precision. I suspect this lingering truth results in an unjustly short average summit stay, given the ascent’s required suffering. A similar anomaly plays out in the form of retiree underspending, in particular with those who create income by selling assets, as with a standard systematic withdrawal plan, as opposed to those who receive streams of lifetime income, as with regular payments from a pension or annuity.

Savers invest a portion of their income today, which reduces the present lifestyle, to pre-fund a desirable lifestyle after retirement, generally into a Defined Contribution Plan, such as a 401(k), SIMPLE, or 457(b) Plan. In an inflationary culture, however, and for retirees lacking a second lifetime income stream (to Social Security), a spend-down in savings is often required to maintain the habituated lifestyle in retirement, and here enters the paradox; for various reasons, retirees are generally uncomfortable watching their nest egg shrink, even to fund pre-planned retirement lifestyle goals, and so they underspend. One research project concluded that retirees with guaranteed income sources spend twice the amount of money as those with an equal amount of investment wealth!¹

While strong legacy goals may justify a degree of underspending, “The Flooring Approach” may help some retirees feel more comfortable spending in retirement and may support retirement lifestyle goals.:

• To determine the percentages of your God-given wealth to be allocated towards giving, investing, and producing lifetime income, start by differentiating between fixed and discretionary retirement expenses.
• Consider whether reliable lifetime income sources may help cover a substantial portion of essential retirement expenses. Start by considering a delay in Social Security benefits to age 70, which will maximize monthly benefits, may provide additional inflation protection over time, and may help support income needs for a surviving spouse with the smaller benefit amount.
• If net Social Security benefits, coupled with other lifetime income sources, like a pension or annuity, don’t cover fixed expenses, consider your ability to buy a lifetime income annuity to make up the difference.

While the advantages of “The Flooring Approach” are notable, most lifetime income annuities don’t include a cost-of-living adjustment, which increases the importance of a delay in Social Security benefits to fight inflation long-term. Consideration should also be given to the type of dollars (Pre-tax, Taxable, or Tax-free) used to fund such an annuity, consistent to your personal tax plan.

It is a mystery to retirement economists that so few retirees spend a portion of their wealth to purchase a lifetime income, referred to as “the annuity puzzle”, especially since it is economically efficient to transfer longevity risk to an insurance company.² Don’t enjoy the well-earned summit too briefly, and don’t be an underspending retiree for lack of due diligence on the subject! May God bless your retirement income planning efforts, Shaun.

“Plans fail for lack of counsel, but with many advisers they succeed”

~Proverbs 15:22

“Commit to the Lord whatever you do, and He will establish your plans.

~Proverbs 16:3

1,2 Ed Slott’s IRA Advisor, April, 2026, “Giving Yourself a License to Spend in Retirement”, by Michael Finke, Ph.D.

Disclosure

Old Forge Wealth Management, LLC is a registered investment adviser. Registration does not imply a certain level of skill or training. This material is provided for informational and educational purposes only and should not be construed as individualized investment, tax, legal, or insurance advice or as a recommendation to buy or sell any security or insurance product. The views and opinions expressed are those of the author as of the date of publication and are subject to change without notice.

All investments and retirement income strategies involve risk, including the possible loss of principal. Strategies discussed, including annuities, systematic withdrawals, and Social Security claiming decisions, may not be suitable for all individuals and should be evaluated based on an investor’s unique financial situation, objectives, risk tolerance, liquidity needs, and tax circumstances. Guarantees associated with annuity products are subject to the claims-paying ability and financial strength of the issuing insurance company. Individuals should consult with qualified financial, tax, and legal professionals before implementing any retirement income strategy.

Past performance and historical research are not indicative of future results.

The Federal Reserve Bank (‘the Fed’) controls the ‘Fed Funds Rate’, which sets the range for the interest rate banks charge each other for overnight loans, which affects the rate charged on credit cards, home equity lines of credit and savings, which impacts the flow of investment capital and the stock market. While this is an impressive amount of authority and influence, it is dwarfed by the primarily ‘market-driven’ 10 Year Treasury Rate (‘the 10 Year’), which sets the global benchmark for risk-free long-term returns, which drives mortgage rates, corporate debt, and asset valuation, and is widely regarded as the most influential financial metric in the world. If ‘the Fed’ is playing Pickle Ball at the local club, ‘the 10 Year’ is winning Wimbledon. The former reflects central planning efforts to manage domestic inflation and employment, while the latter reveals global investor consensus on the two subjects. What is the global investor consensus on the markets and economy today, and what should you do about it?

It was widely reported prior to the U.S.-Israeli attacks on Iran that the stock market had “priced-in” three additional 2026 Fed rate cuts.¹ The attacks on Iran and the closing of the Strait of Hormuz (‘the Strait’) resulted in a rapid and significant rise in the oil price, the natural resource possessing the greatest effect on global inflation. Today the conflict persists, heightened tensions surrounding ‘the Strait’ continue, the oil price remains elevated with upward pressure, inflation reports are now surprising to the upside, and the expected 2026 Fed rate cuts are in question, a combination of factors one might think would invigorate a “risk-off” attitude on Wall Street. To the contrary! With a “Banish the Pessimism!” boldness, retail investors, especially prone to market mis-timing, have in the face of these developments driven the S&P 500 16% higher,² largely in the single sub-sector of semiconductor chips. While it’s impossible to know when a speculative rally will run out of buyers, and while the stock market can remain irrational longer than you can remain solvent, ‘the 10 Year’ is in the meantime on the rise,³ presenting a contrary assessment of these conditions. Respect the rally but never follow the herd; make sure your investment risk management plan is in place.

The broad bond market was enjoying steady 2026 returns that noticeably exceeded risk-free Treasury money market accounts earlier in the year, when ‘the Fed’, was peddling the rate cut narrative;⁴ since ‘the 10 Year’ began its march higher, however, it has faltered and is now posting a paltry .1% 2026 return.⁵ During the May 6, 2023 Berkshire Hathaway annual meeting Warren Buffet declared the long-term era of declining interest rates was over, and recent market conditions have generally aligned with that view. Retail bond investors should at minimum consider the possibility that the general direction for long-term interest rates is now up and carefully consider the risk lower quality and longer-term bonds are subjected to by this dynamic.

It’s more challenging to gauge the timing of the effects a rising ‘10 Year’ yield will have on the U.S. and global economies due to parabolic technological advancement (and its impact of increased economic efficiency), but rising yields are a restrictive factor in regard to capital flows, and ‘the 10 Year’ is a critical primary metric in the conversation. I believe ‘the 10 Year’ yield should be monitored closely by investors at this juncture, and workers should continuously increase specialization in their chosen field in an effort to preserve ever-increasing, irreplaceable value: learn to serve people well!

Think about it, Shaun

“Do you see a man skillful in his work? He will stand before kings; he will not stand before obscure men.” ~Proverbs 22:29

“Whatever your hand finds to do, do it with your might” ~Ecclesiastes 9:10

1 Financial CONTENT, by Market Minute, “The Fed-Market Standoff: Wall Street Defies “Higher for Longer” with Bold Bet on Three 2026 Rate Cuts”, March 27, 2026

2 Yahoo Finance, S&P 500 price chart, March 27, 2026 & May 14, 2026

3 US Department of the Treasury, Daily Treasury Par Yield Curve Rates, January 1, 2026 through May 13, 2026.

4,5 Yahoo Finance, Price Chart of Vanguard Total Bond Market Index Fund (BND) vs. Schwab Treasury Obligations Money Fund (SNOXX), January 1, 2026 – May 14, 2026

Disclosure(s)

The views expressed herein are those of the author as of the date published and are subject to change without notice. This material is provided for informational and educational purposes only and should not be construed as individualized investment, legal, tax, or accounting advice, or as a recommendation to buy or sell any security or adopt any investment strategy.

Forward-looking statements, including opinions regarding market conditions, interest rates, inflation, monetary policy, or economic trends, are based on current assumptions and are not guarantees of future results. Actual outcomes may differ materially from those discussed.

References to indexes, asset classes, sectors, or specific investments are provided for illustrative purposes only and do not reflect the performance of any client account. Investors cannot invest directly in an index. Past performance is not indicative of future results.

Investing involves risk, including possible loss of principal. Fixed income investments are subject to interest rate risk, credit risk, inflation risk, and market risk. Rising interest rates generally cause bond prices to fall. Lower-quality bonds may be subject to greater levels of credit and liquidity risk.

Any references to market returns, fund performance, interest rates, or economic data are derived from sources believed to be reliable; however, accuracy and completeness cannot be guaranteed.

Old Forge Wealth Management, LLC is a registered investment adviser. Registration does not imply a certain level of skill or training.