Issuu

4 8

Giving Beats Receiving

Sean Entin A Stroke of Luck PLUS Striking a Balance on Spending Inflation: What’s in the Basket? An Ounce of Prevention Is Worth a Pound of Cure Stop an Heir War WINTER 2022

At CAPTRUST, we believe we have a profound responsibility to share our success with those less fortunate than we are. One way we do that is through the activities of the CAPTRUST Community Foundation, our in-house, employee-run charitable foundation. Its mission is to enrich the lives of children in communities we serve. The foundation, a registered 501(c)(3) charity, was formally organized in 2007 to provide our employees with opportunities to participate as a group in community outreach efforts and to offer their time, passion, and financial support as a way to give back.

I have found the best way to give advice to your “ children is to find out what they want and then advise them to do it. ” Harry S. Truman

We invite you to like the CAPTRUST Community Foundation on Facebook.

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LETTER FROM THE CEO

DEAR FRIENDS,

PUBLISHER

Despite the ongoing challenges of COVID-19 and the economic problems it caused, the capital markets performed surprisingly well last year—with a few bouts of volatility along the way. While there are always periods of uncertainty and heightened emotions for various reasons, it is discipline to a long-term plan that is key to enduring market turmoil.

J. Fielding Miller Chief Executive Officer EDITORS John Curry Editor-in-Chief

This issue also features a wide range of other topics, including: • The surprising problem of spending too little in retirement; • Current thinking on preventing and treating Alzheimer’s disease; • Inflation and its insidious effects on our thinking and long-term financial plans; • Understanding your family’s heritage through food; and • How you can make sure your most prized possessions go to the right heirs. This issue’s must-read feature, “Giving Beats Receiving” by longtime contributor Jeanne Lee, looks at love, what it is, how it works, and how to get more of it into your life. She spoke with best-selling author

Alysa Cronin Managing Editor

EDITORIAL ADVISORY BOARD

Here’s to cleaning the slate and kicking 2022 off with a bang! This issue’s Second Act hero is Sean Entin. In his 20s and 30s, Entin used his passion and entrepreneurial energy to build several businesses and a life for himself and his family. At age 39, that came to a crashing halt when he suffered a massive stroke. Since then, he has been fighting to rebuild his body and helping other stroke survivors.

Volume 8, Issue 1 | Winter 2022

and psychiatrist Howard Cutler, who shares a few exercises based on his work on the remarkable power of love, happiness, and gratitude. Lastly, in this issue’s investment feature, Investment Strategist Sam Kirby takes a deep dive into inflation, going beyond the headlines to explore what the recent uptick in inflation means for American households. As always, we appreciate your article ideas, reactions, and feedback. Please keep them coming.

Jeremy Altfeder Vice President, Financial Advisor

Ted Lew Vice President, Financial Advisor

Buck Beam Senior Vice President, Financial Advisor

Cara McAuley Manager, Advisor Group

Kathleen Carlson Vice President, Financial Advisor

Greg Middleton Senior Director, Advisor Group

Mark Chamberlain Principal, Financial Advisor

Steven Morton Principal, Financial Advisor

Mike Gray Principal, Financial Advisor

Kathy Waters Senior Financial Advisor

Kathleen Hopkins Manager, Advisor Group

Edward Welch Managing Principal, Head of Wealth Management

ART DIRECTION AND MARKETING Lonzetta Allen Associate Art Director Jennifer Mastrapasqua Art Director

Elizabeth Altman Distribution Manager Kaylin Nuñez Graphic Designer

All the best, WITH THE ASSISTANCE OF

J. FIELDING MILLER CAPTRUST Chief Executive Officer

Azul Photography Raleigh, NC

Worth Higgins & Associates, Inc. Richmond, VA

Gabrielle Burke Pittsburgh, PA

Getty Images Seattle, WA

Justin Gartman Raleigh, NC

CONTENT AND CONTRIBUTORS

JENNIFER BROOKLAND

JOHN CURRY

NANCI HELLMICH

LISA HITT

Jennifer Brookland is a writer, editor, and radio producer living in Durham, North Carolina. She spent three years working in communications for international development organizations before moving to North Carolina. Brookland writes and edits for the World Bank Group, the United Nations High Commissioner for Refugees, Our State magazine, and North Carolina Public Radio.

As chief marketing officer, John Curry is responsible for all areas of strategic marketing and branding for CAPTRUST. In the industry since 1986, Curry has served in senior management roles with firms such as ProShares and AllianceBernstein and has experience in areas of strategic marketing, including product development and design, market research, branding, and sales campaign management.

Nanci Hellmich, an awardwinning multimedia reporter, covered personal finance, retirement, nutrition, and health for USA TODAY for more than 30 years. She now enjoys writing for AARP, encore.org, and other organizations. She has been named a top online influencer on weight loss and nutrition. Hellmich has appeared on numerous television shows, including NBC’s TODAY show.

Lisa Hitt is content strategist at George Mason University. Prior to joining Mason, she was a journalist, most recently an editor in USA TODAY’s Money section. She has also taught courses in journalism and public relations as adjunct faculty. She has a Bachelor of Arts degree in journalism and a Master of Science degree in public relations.

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Features 4

Columns

GIVING BEATS RECEIVING

PASSION PURSUITS

MONEY MINDSET

SEAN ENTIN: A STROKE OF LUCK

GLEANINGS

LASTING LEGACY

STRIKING A BALANCE ON SPENDING

EXPERT ANGLE

An Ounce of Prevention Is Worth a Pound of Cure

CLIENT CONVERSATIONS

MARKET REWIND

CAPTRUST HAPPENINGS

by Jeanne Lee

A Taste of History by Lisa Hitt

by Nanci Hellmich

by Kim Painter

INFLATION: WHAT’S IN THE BASKET?

What’s So Bad About Inflation? by John Curry

Stop an Heir War by Jeanne Lee

by Jennifer Brookland

by Sam Kirby

SAM KIRBY

JEANNE LEE

KIM PAINTER

Leader of CAPTRUST’s Investment Strategist team, Sam Kirby works with the firm’s financial advisors to assist clients with investment strategy, portfolio construction, and monitoring. He has 15 years of financial services experience. He earned a Bachelor of Arts degree in journalism from the University of North Carolina and a Master of Science degree in management from North Carolina State University. He is a CFA charterholder.

Jeanne Lee is a freelance writer living in a lovely college town in Ohio. She has written about consumer and business topics for 20 years, including stints at Fortune and Money. Her work has appeared in publications like USA Today, Fortune Small Business, and Health. She loves thinking about ways for people to hack their finances and daydreams of paying off her mortgage before she has to pay for college for her two boys.

Kim Painter is a freelance writer specializing in health, wellness, and retirement lifestyle. She was a USA TODAY staffer and contributor for many years, working as a reporter, columnist, and blogger. She now writes for AARP and other outlets. She lives in McLean, Virginia, where she practices what she preaches: wearing sunscreen, eating kale, and getting at least 10,000 steps a day.

All publication rights reserved. None of the material in this publication may be reproduced in any form without the express written permission of CAPTRUST: 919.870.6822. ©2022 CAPTRUST Financial Advisors. The opinions expressed in this report are subject to change without notice. This material has been prepared or is distributed solely for informational purposes and is not a solicitation or an offer to buy any security or instrument or to participate in any trading strategy. CAPTRUST does not render legal, accounting, or tax advice. If you require such advice, you should contact the appropriate legal, accounting, or tax advisor. The information and statistics in this report are from sources believed to be reliable but are not warranted by CAPTRUST Financial Advisors to be accurate or complete. Performance data depicts historical performance and is not meant to predict future results.

GIVING BEATS

RECEIVING by Jeanne Lee

“We need love as we need water,” the poet Maya Angelou wrote. From the time we’re babies making sheep’s eyes at our parents to win cuddles, through our teen romances, then as adults, we naturally look to our partners, children, friends, and family members to make us the object of loving attention. Some are lucky in love, while others continue to seek it, but the need to be loved and appreciated is widely accepted as being essential to happiness.

Psychologically speaking, though, there’s a much shorter, more direct path to happiness—and it’s a surprisingly accessible one: giving love. Though we may not pay as much attention to this parallel emotional need, research from the field of positive psychology tells us that humans indeed have a deep, hardwired need to be the givers of love, tenderness, support, understanding, and attention.

co-wrote with the Dalai Lama the classic book, The Art of Happiness: A Handbook for Living. Drawing on 40 years of conversations with the spiritual leader of Tibetan Buddhism, Cutler is a psychiatrist who takes a secular approach to Buddhist practices.

This is according to New York Times best-selling author Howard Cutler, M.D., an expert on the science of human happiness who

Love isn’t a single emotion, Cutler says. Instead, it is a family of emotions and mental states that includes compassion, caring,

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What Is Love, Anyway?

loving-kindness, mercy, and more. All love is positive, but there are nuances. Some types can be seen as conditional, meaning, I’ll love that person as long as he or she loves me back. For example, a husband may have tremendous love for his wife and harbor only good wishes for her. But, say, the wife later cheats, and the marriage ends in divorce. All the warmth and compassion he had for her walks out the door. Conditional love isn’t the most reliable or stable since it contains an implicit desire for someone to fill a certain role for you. A more dependable type of love is compassionate love, according to research from Illinois State University. This is a universal type of love and caring that is not predicated on identifying the person with a particular role in your life. It is more encompassing and can be experienced for family, friends, peripheral ties, and all of humanity. A central feature in many religious traditions, compassionate love is an attitude toward others—either close others or strangers. It is rooted in feelings, cognitions, and behaviors that are focused on caring, concern, tenderness, and an orientation toward supporting, helping, and understanding others, particularly when the others are perceived to be suffering or in need.1 And giving away love is good for your overall health and well-being. In the Harvard Study of Adult Development, which followed Harvard undergraduate males for almost 80 years, the study found that love is a key ingredient to a happy and satisfied life. It wasn’t about money or power, but significant relationships and connections appeared to be very important in

If you want to live a life that is surrounded by love, you have to invest love in others. one’s happiness and life satisfaction. The study also found that close relationships serve as a protective factor against stress as well as mental and physical decline.

Give Love to Get Love The road to happiness through giving love needn’t be convoluted. When you choose to show someone compassionate love—that love comes back to you in the form of trust, respect, loyalty, and more. It can be a small gesture to make your partner or friend feel appreciated, practicing loving-kindness mediation, or just taking time out of your schedule to show up for someone on an occasion big or small. Giving love is not about grand, showy gestures. It doesn’t take a lot of time, effort, or money to offer another person compassionate love and affection. However, if you want to live a life that is surrounded by love, you have to invest love in others.

Cultivate Compassion So, how can you increase your ability to show compassion for ourselves and others? Luckily, there are a host of things each of us can do to turn the emphasis to giving love. Cutler offers techniques and exercises in his “Art of Happiness” six-week personal training courses, executive coaching sessions, and corporate workshops, Cutler teaches simple activities and exercises that are secular in nature but drawn from Buddhist principles. Take a few minutes to try some of the exercises. You may soon feel the effects for yourself.

Loving-Kindness Meditation One very popular form of meditation is loving-kindness meditation, a traditional, centuries-old practice also known as love and compassion meditation or, per the original term, metta meditation. In this kind of practice, meditators focus on sending wishes of love, well-being, gratitude, and compassion out into the world. Sit comfortably, with your eyes gently closed or slightly open, and take three deep breaths. Feel your body relax.

For a few moments, focus on your hopes and aspirations, recognizing the underlying fundamental yearning for happiness. “Here, we are not defining happiness as a transient positive mood, but a profound, pervasive sense of well-being, fulfillment, and freedom from pain and sorrow,” Cutler says. Let two or three short phrases or wishes arise from your heart and mind. Some examples: May I be healthy. May I be well and happy. May I live with ease. Silently repeat them for a couple of minutes while feeling your desire for them to come true. If your mind wanders, gently return your attention to the phrases. Next, focus on a loved friend or family member. Visualize this person there before you and silently say his or her name as you try to feel this person’s presence. Recall that, like yourself, this person wants to be happy and not to suffer. For a few minutes, direct your phrases toward that person: May you be healthy. May you be well and happy. May you live with ease. Adapt the phrases to fit their situation. Think of a neutral stranger or acquaintance that you don’t know well and neither like nor dislike—maybe a worker you see at the grocery store or a colleague you don’t work closely with. Even if you don’t know his or her name, visualize that person and try to sense his or her presence. Connect with a shared aspiration for happiness and freedom from suffering. Then direct your phrases of love and compassion toward the stranger.

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Think of an adversary, someone who has annoyed you or harmed you in some way. Visualize the person clearly in front of you. Try to cultivate an awareness that this person is no different from the loved one or stranger, in that they also want to be happy and free of suffering. Extend your phrases to this person. Direct your phrases of love to the world. Visualize a white light expanding from your heart spreading to permeate the bodies and minds of all people and creatures living on Earth, known and unknown, in the air and in the water, eliminating their distress and endowing them with well-being. Open your eyes and carry these feelings with you in your daily interactions.

15 Circles Exercise This exercise cultivates compassion and forgiveness. Think of someone you know well and have some kind of grudge against, maybe a family member or former romantic partner. Draw a circle on a sheet of paper and write a few words in it describing your grudge. Next, draw 15 more circles on the same paper. Fill each one with a word or phrase about something you could be grateful to that person for. Although you may not immediately feel grateful, use your creativity to think of some benefits to you that arose out of the situation. You can try asking yourself a few questions: •

Did I learn something from this person that I wouldn’t have otherwise?

•

Did I meet anyone through the experience who became part of my life?

•

Did this person help open any doors in my life?

•

Would I have missed out on an opportunity if not for this person?

Fill as many circles as you can, even if you can’t fill them all. The exercise is not meant to excuse or minimize what you’re angry about. The purpose is to look at the person’s entire effect on your life, not just the negative, “and in the process, diminish the grudge as your perspective widens to authentically include this gratitude,” Cutler says. You may not end up loving the object of your grudge, but the gratitude produced will open up your heart. 1

Remember to start slowly. You may find that what you get back can be very fulfilling, and even that the supply of love you have is endless. A Simple Act of Gratitude When was the last time you wrote a letter to your partner, friend, or family member? This simple act of gratitude can help reconnect you to a loved one. Moreover, practicing gratitude is one of the easiest, most effective ways to increase overall happiness, Cutler says. Think of someone that you feel gratitude toward but have never properly thanked. Write a detailed letter to the person, explaining what they did that you appreciated and how specifically it made you feel. The next step is to make an appointment to see that person and read the letter aloud. This may feel awkward for some, but those who push themselves to do it will find it very powerful. “This exercise often elicits intense positive experiences, which some people may find transformative—and the effects have been shown to last a long time,” Cutler says. Even writing the letter without sharing it can be a positive experience. Remember to start slowly. You may find that what you get back can be very fulfilling, and even that the supply of love you have is endless. The truth is, the more love you give, the more love is given to you and that you have to give to others.

Fehr, Beverley, Sprecher, Susan, “Enhancement of Mood and Self-Esteem as A Result of Giving and Receiving Compassionate Love,” Illinois State University, 2006

About Howard C. Cutler Howard C. Cutler, MD, is a psychiatrist, New York Times best-selling author, and leading expert on the science of human happiness. He is coauthor with the Dalai Lama of the internationally best-selling series The Art of Happiness. Dedicated to helping people find happier, more rewarding lives, Dr. Cutler works with individuals privately and has given presentations on happiness throughout the U.S. and abroad. He has been interviewed on hundreds of radio and television programs, and featured in magazines and newspapers, including Time, O-The Oprah Magazine, and Psychology Today. Dr. Cutler holds degrees in art and zoology and a medical degree from the University of Arizona College of Medicine in Tucson. He lives in Scottsdale, Arizona.

a stroke of luck SECOND ACT

by Nanci Hellmich

As an entrepreneur in his 20s and 30s, Sean Entin used his boundless energy to build an almost perfect life for himself and his young family. He developed new companies, lived on the beach, and trained to stay in peak physical shape. But in 2011, that world collapsed.

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At the age of 39, Entin suffered a massive stroke. Since then, he has been fighting his way back—not only to rebuild his body, but to launch a second act helping other stroke survivors. “God wanted me to take a new journey, a new path. I call it a stroke of luck,” says Entin, 49, of Tarzana, California.

Go, Go, Go Entin’s drive to create new businesses started early. At age 21, while earning a degree in business administration and management with an emphasis on entrepreneurship, he was featured on the cover of the business section of the Los Angeles Times for launching a teen dance club. After graduation from the University of Southern California, he produced feature films, commercials, music videos, and a television show. He became one of the first fight managers in the mixed martial arts world, representing big names in the field, such as Mark Kerr and Tim Sylvia. Later, he moved from Los Angeles to San Diego to work with two start-up companies, collaborating with basketball legend Shaquille O’Neal. “I was raising money, building my companies, all the time looking for something new,” Entin says. “I was always connecting people. I was wound up too fast and too hard. I was go, go, go. I didn’t slow down, and something was bound to happen.” By age 39, Entin was on top of the world. He lived on the beach in San Diego with his wife and two daughters, then ages 18 months and four years. “I love being a dad,” he says. “I was born to be a father. We were always off to the beach, the zoo, Sea World.”

Like a Sledgehammer By this time, Entin was involved with teaching entrepreneurship skills to Navy SEAL veterans. He also trained with them in mixed martial arts. “I loved the sport. I loved athleticism,” he says. But in the fall of 2011, when Entin was doing a mixed martial arts workout, he got choked out. “I passed out and wasn’t able to tap out,” Entin says. He went home that afternoon knowing something was wrong with his throat. For about four weeks after the incident, Entin continued to run his business and jet around the country despite the pain on the right side of his throat. On Thanksgiving weekend, he and his family were celebrating the holiday with friends in San Luis Obispo, California, when things got worse. “I woke up the night of Thanksgiving, and the room was spinning,” Entin says. “It felt like someone was bringing a sledgehammer to my head.” He walked to the bathroom. “As I looked in the mirror, the left side of my face was drooping badly. My face was ash gray,” Entin says. “I couldn’t speak, and I lost movement in my left arm.” At that moment he asked his wife, Stephanie, to call his dad, a retired medical doctor in Tarzana.

STROKE SYMPTOMS AND WARNINGS SIGNS You can be better prepared in the event you or someone else suffers a stroke. The American Stroke Association says to watch out for the sudden symptoms below. •

•

Confusion, trouble speaking or understanding speech

•

Trouble seeing in one or both eyes

•

Trouble walking, dizziness, loss of balance or coordination

•

Numbness or weakness of face, arm, or leg, especially on one side of the body

Severe headache with no known cause

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“I think my son is having a stroke,” Dr. Allen Entin said. “Call the paramedics right now.” Entin was rushed to a nearby hospital, then medevacked to Santa Barbara Cottage Hospital, where Alois Zauner, a top neurosurgeon, began treating him. After several procedures didn’t work, Entin was put in a coma for 10 days. Then the surgeon performed a craniectomy and temporarily stored a piece of his skull in his abdomen to reduce the swelling on his brain. When Entin awoke from the coma, his father told him he was a paraplegic, paralyzed on his left side. “I couldn’t stand up. I couldn’t walk,” Entin says. “I had a helmet on my head to protect my brain. I had a feeding tube. I had a peripherally inserted central catheter line going from my arm into my heart, and I had a scar on my head shaped like a horseshoe.” He was also frail, having dropped from a fit 175 pounds to 140.

I Can, I Shall, I Will Entin was taken for inpatient neurorehabilitation at a hospital near his home in San Diego. “The first neuropsychiatrist who got a hold of me ran a couple of quick tests, and she said, ‘The

right side of your brain is dead. Don’t think about driving, working, or walking for a long time.’” He fired her. Then he brought in a team of people who believed in him and adopted his new mantra: I can. I shall. I will. “I kept saying to myself every day, ‘Put yourself in the mindset that you can do anything and nothing is impossible.’ I knew if I kept moving,” Entin says, “I was going to keep improving.” What motivated him the most was the thought of not being able to hold, hug, or kiss his daughters. Entin says the greatest joy of his life comes from spending time with Savannah, now 14, and Shiloh, who is 11. “They are my why. My daughters are the reason I wanted to walk again, not sit in a wheelchair.” So, he worked from early morning until the evening, even calling in medical professionals on the weekends. “I called it my boot camp,” Entin says. “I couldn’t even sit up straight. I lost the whole left side of my body from my vision to hearing to swallowing to walking. I had to relearn to walk, dress, shower, and use the toilet.” After his stint in rehab, he went back home, but it was too hard on his wife to take care of two young children and him, so Entin moved back in with his parents in Tarzana. “I needed to heal. I needed to do my therapies,” he says. Of course, there were days and moments when he wanted to give up. “The physical side is painful. But the emotional trauma and the mental anguish was harder than the physical stuff at times,” Entin says. His rehabilitation took a toll on the

people he loved—his parents, his family, friends, and his marriage, which ended in divorce. “Everybody felt so helpless, so angry, and so exhausted because they didn’t know what to do for me.” A sense of humor helps, he says: “Humor heals, but it takes time to get through the pain, the sorrow, the depression, and the darkness.” Once you get through that, he says, your light shines brightly on everybody.

Transforming Lives About 800,000 Americans suffer a stroke each year, and approximately two-thirds of these individuals survive and require rehabilitation, according to the National Institute of Neurological Disorders and Stroke. Many survivors can have prolonged recovery and some are left with residual neurological deficits. In fact, complete recovery can take months or even years. That is why, in 2018, Entin founded strokehacker.com and the associated Stroke Hacker Community, with one simple goal in mind: helping others hack their strokes or traumatic brain injuries (TBIs). His work includes one-on-one coaching, encouraging survivors to face new challenges in their lives and helping them begin to plan a recovery road map. When Entin is not doing national TV appearances or podcasts to tell people what’s possible with a resilient attitude, he works with the families of survivors.

In 2018, Entin founded strokehacker.com with one simple goal in mind: helping others hack their strokes or traumatic brain injuries (TBIs). “You have to get the people around the traumatic survivors involved,” Entin says. His neurologist, S. Thomas (Tom) Carmichael, chair of the Department of Neurology at the David Geffen School of Medicine at UCLA, agrees. “Survivors need a team of supporters,” Carmichael says. “They need a network of people who will help them recover, and they need a process.”

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In addition to strokehacker.com, Entin has created Move 2 Improve, a 501(c)(3) nonprofit foundation working on rehabilitating those who have suffered TBIs. Between his endeavors with the nonprofit and strokehacker.com, Entin’s goal is to help transform the lives of 1 million people overcoming any kind of traumatic injury—whether it’s a stroke or spinal cord injury—by 2030. “Sean is an enormous force for good for those around him,” Carmichael says. “He sees the good in people and brings out the best in them, urging them on to further achievement.” Entin never gives up, says Gloria Rios, his athletic trainer for the past five years and co-founder of the Stroke Hacker Community. “He always has hope, even when he’s down,” Rios says. “The one thing he didn’t lose through his stroke is his drive to excel and continue to look out for other people.”

“

My stroke gave me a deeper understanding of kindness and compassion and most importantly, allowed me a chance to make a difference for others. Sean Entin

”

Entin does rehabilitation three times a week and is seeing improvements. But the signs of stroke are noticeable. “My left arm is still weak, my left fingers don’t work as well as they should, and I walk with a limp,” he says. However, he is not angry about what happened to him. “This was God’s way of me becoming someone new and better,” Entin says. “My stroke gave me a deeper understanding of kindness and compassion and most importantly, allowed me a chance to make a difference for others.”

The Stroke Hacker Recognized as a thought leader and speaker in the stroke survivor community, Entin is helping survivors

and those around them find new ways to work through challenges, break through plateaus, and begin planning their recovery based on tailored advice. The Stroke Hacker methodology uses a simple, yet powerful approach. Ask the important questions. What is your current situation and what do you want to achieve? What is your perspective on your situation, and how does that need to change to get there? What are you doing to accomplish your goals, and what behaviors do you need to change? Assess opportunities. Each stroke survivor’s situation is unique and so are the opportunities available to them. With the support of the Stroke Hacker Community, those overcoming TBIs will have an expert in their corner to help them navigate the host of offerings and opportunities, such as modified therapies to best serve individual needs and custom planning to get them closer to recovery and independence. Work together to achieve the unbelievable. Overcome difficulties and achieve a new reality with a shared commitment and accountability. Your success is Stroke Hacker’s success. For those who have suffered brain injuries, the Stroke Hacker Community is a place to share stories, accomplishments, and tips for improving overall health and wellness after a TBI. Subscribe at strokehacker.com to start receiving tips and insights into TBI recovery, or visit Stroke Hacker on social media.

@StrokeHacker

Sean Entin—The StrokeHacker

@StrokeHacker

Sean Entin

@thestrokehacker

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PASSION PURSUITS PURSUIT

A TASTE OF HISTORY by Lisa Hitt

Who’s hungry for a taste of their culinary history? Whether you are interested in discovering the special place lavash holds in Armenian food culture and social life, or where and how schnitzel originated, or learning more about the shared culinary history of Bangladesh, you can explore it through food. “Food is a key that unlocks everything,” says Robin Mather, a food writer for more than 40 years and author of The Feast Nearby. “It unlocks the cultures of our neighbors, it unlocks our own history, and it unlocks the history around the world,” Mather says, whose forebears came from Wales to work in the coal mines in Iowa. When she makes Welsh cakes (similar to scones) or cawl (a kind of lamb soup), Mather says she thinks about her family’s journey. Marcela Curry, of Raleigh, North Carolina, agrees that food is a way to maintain a link to your home and culture. “For me, because I am an immigrant to this country, it’s a way to stay connected to where I’m from and a great way to stay connected to who I am,” the native of Chile says. “As I’ve gotten older, it’s interesting how being an immigrant has become more important to me,” Curry says.

Adapting to Change The traditional foods you grew up eating might not be quite the same here as those your family prepared in its country of origin. Don’t be disappointed if you can’t replicate a traditional dish exactly as you had it there.

“Recipes for traditional foods are living things that evolve over time,” Mather says. “You see that in a lot of Italian recipes.” Some of the ingredients they were working with just weren’t available in the U.S., Mather says. For example, mortadella (a cold cut meat mixture) and sausages were nowhere to be found. “The Italian immigrants had to improvise on the spot.” That would also be true for many African and Asian people, Mather says, who couldn’t find the fruits and vegetables they were familiar with when they came to this country. They had to alter traditional dishes, while others had to change recipes to keep costs down.

“

Recipes for traditional foods are living things that evolve over time. You see that in a lot of Italian recipes. Robin Mather

”

“When I was the food editor at The Detroit News, I had a colleague whose grandparents emigrated from Armenia, and as a teen, he lost his mother to breast cancer,” Mather says. “He was desperate to create his mother’s recipe for kibbeh (spiced grain and meat shaped into balls).”

Just a Click Away Want to discover hands-on classes filled with opportunities to cook up tasty feasts while gaining a window into kitchens across the world? Simply search virtual world cooking classes on Google for myriad opportunities. Truffle Shuffle Created by a trio of former chefs from the Michelinstarred French Laundry in Napa Valley, Truffle Shuffle’s Italian- and French-inspired classes include all the ingredients to create the recipes delivered right to your door. Prices start at $95. truffleshufflesf.com. Traveling Spoon Traveling Spoon pivoted early in the pandemic from providing food tours with locals to creating online experiences to give homebound travelers authentic interactions with other cultures. All classes are private and are scheduled at your convenience over

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One day, she says, he burst into her office and said, “‘I got it, I got it! I figured it out!’” What he discovered was that his mother couldn’t afford the traditional ground lamb, so she used a mixture of three-quarters ground beef and one-quarter ground lamb. “That was the taste he remembered,” Mather says. Another consideration is that ingredients might be the same, but the flavor of the dish will be different, Curry says. “Chile is mountainous; volcanic soil is everywhere. The flavors of food are going to be different,” she says. “A cup of milk in the U.S. will taste very different from a cup of milk in Chile,” Curry says. Beef and pork might have a different taste because of the way the animals were raised and what they were fed. “If you go to the southern part of Chile and you have lamb, you will remember it,” Curry says. “The flavor and the smell of lamb when it’s cooked there is sweet; it’s just divine.”

Explore from Home If you’re not able to travel, food is the best way to start learning about another culture or country, Curry says. “I had to teach myself to eat spicy food because I had never had it.” When she got to the U.S., because she spoke Spanish, when Curry went to a Mexican restaurant, people assumed that she knew the food, she says. “I had never had Mexican food before,

Zoom; the cost is $36 for one person and $18 for each additional person on the same device. travelingspoon.com. Giglio Cooking School Subscribers say chef Marcella Ansaldo is great at building the self-confidence of novice chefs while teaching crowd-pleasing dishes such as tagliatelle with vegetable sauce and tiramisu. Giglio Cooking School offers group Zoom classes for $90 or private classes for up to five people on one device for around $115. gigliocooking.com. Goldbelly LIVE! During the pandemic, Goldbelly, a marketplace for top restaurants and shops delivered worldwide, became a bit of an obsession. That could be why Goldbelly LIVE! interactive cook-alongs with top chefs, with all the ingredients delivered to your door, have become so popular. Prices start at $119. goldbelly.com.

so I had no idea what the menu was about,” Curry says. “But being exposed to Mexican food made me think, ‘Wow, the world is full of interesting stuff. What other kinds of foods are out there?’” Exploring cultures through specialty cookbooks is one way to start. However, if you want to prepare a traditional dish, the recipe might call for ingredients that aren’t available locally. Mather recommends turning to online vendors such as Penzeys Spices and The Spice House. Curry advises checking your television listings. “On Netflix, Taco Chronicles walks you through the food culture of Mexico.” It’s a fascinating way to learn about Mexican culture, Curry says. “A taco is not just a taco; the filling represents the food that is being grown in that region in Mexico.” TV is rife with shows about food from all corners of the world today: British baking, Asian street food, Mexican asado, and more. Local festivals are also a good way to explore a culture through cuisine. For example, where Mather lives in Arizona, there is the Tucson Meet Yourself festival. Other local resources you might find helpful could include ethnic and international grocery stores, specialty street markets and food stalls, cooking classes, cultural centers, and neighborhood churches.

Travel to the Source “If money is no object, I would travel to a place where I could sign up for a series of cooking classes,” Mather says. “Working with someone in the country of your heritage, you’ll get a clear idea of how that food fits into your culture.” Curry enjoys exploring food when she travels. “I just go and salivate walking through the markets. I’m drawn to the smells when I walk by, and I have discovered some absolutely amazing things,” she says. If you’re planning a trip, she advises doing a little culinary homework before you go. “Do the research, and it’s not that difficult to figure out what good food is really all about,” Curry says. And she practices what she preaches. “When I travel for work, I’m notorious for disappearing, and you will find me at a restaurant, hopefully a Chilean or other Latin American restaurant,” Curry says. “The more styles of food you try, the more you understand how your food culture connects to others.”

Making Connections Food can also be a way to tell your children about family history. Mather advises cooking with kids while telling stories

about your parents and grandparents. Talk about the history of the dish, where it originated, and where it’s eaten today. Host a potluck for family, friends, or community and have each person bring a special dish to celebrate their culture. Or use a holiday, birthday, or the anniversary of a loved one’s passing to celebrate their life with a special meal. Curry says families frequently share their histories and cultures with their communities through food. “Food is a great way to transfer knowledge from one generation to the next and a great way to expose friends to another side of your personality.” Curry celebrates Chilean Independence Day with her family and friends by making empanadas (baked meat pies) and ensalada chilena (a salad with tomatoes and onions) served with wine from the South American country. Her empanadas have inspired more than one person to visit her homeland. Go backward, but also sideways and forward, Mather advises. Are you getting to know your own background? Your neighbor’s background? A culture in which you have an interest? No matter what, food is the key that will open any door. “Whatever your heritage is, eating the foods of that culture can help you connect to that heritage,” Mather says. “And if you’re fortunate enough to have memories of a person who emigrated, it will help you remember that person, as well.”

The Feast Nearby Robin Mather’s The Feast Nearby celebrates small pleasures: home-roasted coffee, a pantry stocked with home-canned green beans and homemade preserves, and the contented clucking of laying hens in the backyard. Mather also draws on her rich culinary knowledge to present nearly one hundred seasonal recipes that are inspiring, enticing, and economical, such as pickled asparagus with lemon, tarragon, and garlic; ciderbraised pork loin with apples and onions; and cardamom-coffee toffee bars.

STRIKING A BALANCE ON SPENDING by Kim Painter

During his working years, Fritz Gilbert was a super saver: He socked away an average of 20 percent of his earnings and invested carefully. But when he retired from a 33-year career in the aluminum industry in 2018, he and his wife, Jackie, switched their mindset. Within the confines of their carefully constructed financial plan, they became unabashed spenders. Since then, they’ve taken a 7,000-mile train trip, toured the country in their RV, and purchased a second home near their daughter, son-in-law, and three-year-old granddaughter. Their primary home, a 2,000-square-foot cabin in Blue Ridge, Georgia, is a step up from the vacation cabin they first moved to after selling their big family home in Atlanta. Recently, they added a woodworking shop that doubles as a writing studio for Gilbert, who is the author of a blog, The Retirement Manifesto, and a book, Keys to a Successful Retirement: Staying Happy, Active, and Productive in Your Retired Years.

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“We’re in the go-go years,” says Gilbert, 58. “We’re young, we’re healthy, we’re traveling. We are not worried. We are enjoying ourselves.” Are the Gilberts crazy not to worry? Or are they on to something? They are definitely on to something. While many American retirees do indeed need to scrimp in order to keep paying their bills, many others have a nicer problem, financial researchers say.

If these well-funded retirees don’t start spending more of what they have, they may die with their nest eggs largely intact or expanded—even if they never consciously decided to do so. While surviving family members, charities, or other beneficiaries may appreciate such sacrifices, there’s a price, says Sarah Asebedo, an assistant professor in the school of financial planning at Texas Tech University. “The downside is life not lived,” she says. “If you don’t pull the money out, if you don’t spend it, what are you missing out on? What are you holding back on? What are you giving up?” The things you could miss out on—from travel to family time to doing good works—are exactly the things you probably saved for in the first place, she and other experts say.

The Retirement Consumption Gap In the dry lingo of academia, this underspending problem is called the retirement consumption gap. It’s unclear how common this somewhat enviable affliction is. But recent research provides some clues. One study published in 2021 in the Journal of Financial Planning found that just 18 percent of newly retired Americans had enough wealth to keep spending at preretirement levels. But a funny thing happened as people settled into retirement. Almost everyone, at every wealth level, spent less. In most cases, this was a good move, a matter of right-sizing spending to fit available resources, co-authors David Blanchett and Warren Cormier reported. They found that 10 years into retirement, 48 percent of households had the resources to support their spending. But because well-funded households typically cut back on spending, as well, many actually spend much less than they could afford. “We see too many households err on the side of not spending when they’re younger in retirement” for fear of running out of money when they are older, says Blanchett, who is managing director and head of retirement research for PGIM DC Solutions, the global investment management business of Prudential Financial. Another study, also published in the Journal of Financial Planning in 2021, found that average retirees in the top three-fifths of income spent less than they took in from Social Security, pensions, investment earnings, and other income sources. The researchers, led by Asebedo’s Texas Tech colleague Christopher Browning, then looked at how that consumption gap might affect overall assets over a 30-year retirement under various investment scenarios. Their conclusion? Even if a generous 40 percent of the portfolio was set aside for late-in-life medical expenses and bequests, a

“

If spending doesn’t change during retirement at all, and they don’t do any travel or anything outside the realm of their normal budget, what ends up happening is that their asset base grows year after year after year until they pass away. Mike Gray

”

retiree with a mid-level income might underspend by as much as 8 percent. The wealthiest retirees might use 47 percent less than they could safely spend. “Retirees in the top quintile of financial wealth were spending nowhere near an amount that would place them in danger of running out of money,” the researchers concluded.

Understanding the Underspending Mindset Mike Gray, a CAPTRUST financial advisor based in Raleigh, North Carolina, says he sees plenty of people who haven’t saved and invested nearly enough to keep up their spending in retirement. These folks may have enjoyed six-figure incomes, nice homes, pricey vacations, and other trappings of a comfortable lifestyle, but they never saved more than the bare minimum in a 401(k) plan. Many are unpleasantly surprised to learn that they must live more modestly in retirement, he says. But Gray also sees plenty of potential under-spenders among diligent lifelong savers. For example, take a couple who have $3 million in retirement accounts and are used to living well within their means, Gray says. “If spending doesn’t change during retirement at all, and they don’t do any travel or anything outside the realm of their normal budget, what ends up happening is that their asset base grows year after year after year until they pass away.” All of a sudden $3 million is $12 million, Gray says. “You show them that and say, ‘OK, what do you want to have happen with this?’ And their eyes kind of go wide and they say, ‘Oh, wow, I never thought about that.’” 20

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The objections to spending go beyond gut feelings, of course. People who retire at 60 or 65 are worried about their healthcare needs if they live to be 90 or 95. But nudging people to spend more isn’t a simple matter of showing them an eyepopping projection. That’s because good savers often have personality traits that make them uneasy spenders, Asebedo says. In one study, she and Browning found some of the lowest portfolio withdrawal rates among people who showed the highest levels of conscientiousness.

Figure One: What Are You Planning to Do with Your Assets in Retirement?

“These are the quintessential savers, the budgeters, the ones who have all the checklists,” she says.

34%

Spending more may literally make such people queasy, Asebedo says. “We expect people to just flip a switch once they get to retirement. We say, ‘OK, it’s time to take money out, it’s time to spend.’ And I think we underestimate what kind of a psychological leap that can be for a lot of people because of the years and years of blood, sweat, and tears and self-control it took to put that money in. It actually can feel painful and nauseating for some people to pull money out.”

14%

Grow your assets

29%

14% 9%

Spend down none of your assets

Spend down a small portion of your assets

Blanchett agrees. “People spend all these years socking away money … then all of the sudden to change that mindset from Source: Employee Benefit Research Institute ‘save, save, save’ to ‘spend, spend, spend,’ that’s just not easy.” He says many people envision their portfolios as “this gigantic pot of money” that must be protected because it can never be replaced.

Spend down all your assets

In fact, according to a September 2020 Employee Benefit Research Institute survey of 2,000 Americans ages 62 to 75, only 14.1 percent think they’ll spend down all their assets. Moreover, as shown in Figure One, nearly 60 percent plan to grow their assets in retirement, leave them untouched, or spend them down only a little. The objections to spending go beyond gut feelings, of course. People who retire at 60 or 65 are worried about their healthcare needs if they live to be 90 or 95. Or they are worried they may need to financially support an aging parent or a struggling adult child. Some are highly motivated to leave large sums to their children, though Gray says such folks are in a distinct minority. Some have other bequests in mind. Many are worried about maintaining their lifestyles if markets tank in the future.

The secret to loosening the purse strings without losing peace of mind? It’s all about planning.

Enjoying the Well-Planned Retirement Allen Chamberlain, a retired schoolteacher and librarian from Richmond, Virginia, might seem like the sort of person who would have trouble spending her retirement savings. Chamberlain, 68, says she grew up with parents who “were pretty remarkable savers, even though they were not high income.” She tried to follow in their footsteps during her working years, contributing as much as she could to her retirement plan and sticking to a conservative but effective investment strategy. She also received an inheritance from her thrifty parents. Before she retired at age 65, she worked with her financial advisors, including Gray, to come up with a plan for making her money last. “I came up with a budget of what was really necessary and what was important to me, and that helped me see what was possible,” she says. Under her plan, she gets a monthly income from her portfolio that goes straight into her checking account. With that income, along with Social Security, she says she lives a comfortable but not extravagant life. One luxury she allows herself and has budgeted for is regular extended trips overseas to visit her grown daughter, Evie, who lived for several years in Edinburgh, Scotland, and now lives in Zurich, Switzerland. Chamberlain says her planning also allows for flexibility. She says that when she wanted to withdraw $30,000 to renovate two bathrooms in the home she shares with her partner of 31 years, she checked with her CAPTRUST advisors. They reassured her that the expense would not throw her long-term plans off track or force her to cut corners. “They were able to assure me that ‘you’ve got this,’ because of the careful planning in place.” Planning is also the secret to the Gilberts’ active lifestyle. Before he retired, Fritz Gilbert says he and his wife decided they could safely withdraw 3.3 percent each year from their portfolio. That’s in the conservative range recently endorsed by some financial forecasters worried about future market downturns, Gilbert notes.

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His plan also includes spending less in later years when healthcare costs typically rise but other wants and needs tend to decline. The Gilberts also plan to leave a pool of money available in case either of them needs costly long-term care. “You’ll never alleviate all the risks, but you do what you can to alleviate the most likely risks,” Gilbert says. And then, he says, you live your life and, ideally, think very little about money. Like Chamberlain, Gilbert has a paycheck sent monthly to his checking account. And that money, he says, is money he feels very comfortable spending. On a typical day at home, he is exercising, writing, or building something in his workshop. His wife is busy running a nonprofit called Freedom for Fido that provides doghouses and fences to families that would otherwise leave their dogs on chains. One week a month, they load up their own four dogs and head to their condo in Alabama to spend time with their daughter and her family. When money builds up in their checking account, they spend and enjoy it—because, Gilbert says, that’s why they saved it in the first place. “We are not recklessly optimistic,” he says. “But we live optimistically.”

GLEANINGS

RANDOM GLEANINGS While making the Winter 2022 issue of VESTED, we picked up some insights on recovering from a stroke, hyperinflation, and the magnitude of Alzheimer’s disease in the coming decades.

Pennsylvania

Hungary

41,900,000,000,000,000% The post-World War II hyperinflation rate in Hungary, which holds the record for the most rapid monthly inflation increase ever, with prices doubling every 13.5 hours!1

7 The amount of time it takes of practicing loving-kindness meditation to increase a person’s feelings of social connection toward others.2

2 weeks

The time it takes after a stroke for the human brain to begin to recover, according to a study by the University of South Australia.

The approximate number of Americans, age 62 to 75, who cited saving for unforeseen costs as the reason why they don’t plan to spend down their assets in retirement, according to Bloomberg.com

38%

13 million

The number of Americans projected to be living with Alzheimer’s by 2050—and the approximate population of Pennsylvania.3

As Warren Buffett says in his biography, The Snowball: Warren Buffett and the Business of Life, “The more you give love away, the more you get.” And let’s face it— he is rarely wrong. 1

21%

The number of disputed wills contested in the name of jewelry or personal possessions.4

Lehnardt, Karin, “25 Interesting Facts about Inflation,” factretriever.com, 2017

“The Power of Unconditional Love,” Newport Academy, 2018

Alzheimer’s Association, 2021

Lutrey, Lesser, “10 Important Statistics about Sibling Estate Disputes,” llphlegal.com, 2018

EXPERT ANGLE

AN OUNCE OF PREVENTION IS WORTH A POUND OF CURE by Jennifer Brookland

Most of us picture our golden years as an enjoyable medley of fun and relaxation. Time with the grandkids, that trip we’ve had on our bucket list for ages, long stretches spent on our favorite hobbies. The reality that Alzheimer’s disease robs more than one in nine people over the age of 65 of these experiences is not something we like to dwell on.

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Yet Alzheimer’s is the leading cause of dementia among older adults, with an estimated 6.2 million Americans currently suffering from it.1 A diagnosis has long seemed like a tragic one-way ticket down a sure path of cognitive decline, and for good reason: Alzheimer’s disease was incurable, untreatable, and believed to be unpreventable.

Research has also revealed that we have a much longer window in which to treat the disease—which is present well before any cognitive impairment sets in.

It isn’t anymore.

“We know that Alzheimer’s starts 20 years, give or take, before the symptoms of dementia ever start,” explains Eric VanVlymen, a regional and executive director with the Alzheimer’s Association. “Dementia is really the end of a long process.”

In addition to the first-ever Federal Drug Administration (FDA) approved drug that treats Alzheimer’s disease, ongoing research is proving that lifestyle changes within our control can go a long way in delaying or even preventing it.

The fact that Alzheimer’s begins decades before any mental decline means there is ample opportunity to address it before it causes problems, ideally even pushing the disease progression so far out that we succumb to other ailments before our cognition ever slips.

“That’s the out-of-box thinking,” says John Walker, chief technology officer and founder of uMETHOD Health, a precision medicine start-up. “At every point in this, you can control the progression.”

“A five-year delay in the onset of Alzheimer’s would cut the Alzheimer’s numbers in half,” VanVlymen says.

A Multivariable Problem Walker’s expertise lies in building complex systems to solve complicated problems, and Alzheimer’s disease might be the most tangled knot he’s taken on. According to Walker, there are 40 or 50 factors at play in causing the disease: genetics, history, blood chemistry, lifestyle—all interacting and confounding. “This is a multivariable problem,” Walker says, “and the stinker is they interact with each other and they change.”

So how do we do that? What factors are under our control that we can change in order to prevent or slow the progression of this disease?

What You Can Do to Prevent Alzheimer’s For those who already know they have Alzheimer’s disease, recent FDA approval of the drug Aduhelm offers a big dose of optimism. Though controversial for its accelerated approval and cost, Aduhelm is the first drug to actually slow disease progression. And since it is indicated for those who are not even showing cognitive impairment

Between the ages of 65 and 75, 5 percent of people have Alzheimer’s disease. That number rises to nearly 14 percent as we age past 75. By the time we’re 85, more than a third of us will have the disease.2 It’s visible in our brains. Protein fragments of beta-amyloid clump into plaques outside our neurons while the abnormal form of the tau protein tangles up inside them. These and other changes can cause neurodegeneration, inflammation, shrinkage, and atrophy. The changes in our brains lead to changes in our lives, such as memory problems, impaired judgment, depression, and eventually physical impairment and death. Walker’s company is figuring out which of the interacting, overlapping factors to prioritize when it comes to preventing and slowing disease progression. And his work, and encouraging recent clinical research, is showing for the first time that it’s possible. An ongoing Finnish study known as FINGER was the first randomized controlled trial to prove that cognitive decline could be prevented through a combination of four lifestyle changes. And a modeling and meta-analysis published in The Lancet last year found that around 40 percent of worldwide dementias could theoretically be delayed or prevented. “It is never too early and never too late in the life course for dementia prevention,” the authors write.

The fact that Alzheimer’s begins decades before any mental decline means there is ample opportunity to address it before it causes problems.

routine blood exams that check for the amino acid homocysteine; buildup can cause dementia, yet is easily treated with vitamins. “It’s a brain toxin,” he says. “And it’s just a two-dollar blood test, but it appears that no doctors ever do it.”

or have just begun to, it means people may be able to live with Alzheimer’s without ever developing dementia. But the exciting news that lifestyle changes can slow the progression of Alzheimer’s means popping a pill is only one thing you can do to fight back. The actions you can take are not extreme. They’re not even surprising. “It’s everything your doctor always tells you,” says VanVlymen. Findings from the FINGER study suggest four lifestyle approaches can help improve cognition among higher-risk elderly people. First, keep your brain active. And sorry, but soduku might not cut it. “There’s a difference between brain activity and learning,” VanVlymen says. “Active learning is really important.” Second, you truly do have to get off the couch. Physical exercise—even something as simple as walking—is another critical to-do. Third, research suggests eating a healthy diet is part of the answer. Diets clinically proven to combat cognitive decline are similar to the Mediterranean diet and the DASH diet, which minimize processed foods and encourage vegetables, nuts, berries, and legumes. Finally, it’s critical to deal with cardiovascular risk factors like diabetes and high blood pressure. “The largest cardiovascular part of your system is your brain,” explains VanVlymen. “So, whatever is good for your heart is good for your brain.” Because these four things were tested all together, researchers have yet to tease out what lifestyle changes pack the most punch. But taken with other research findings, there are plenty of things under our control that seem to matter. “You actually have to sleep,” laughs Walker as he refers to a chart with dozens of factors at play in cognitive health. Avoid smoke and even air pollution if possible. Try to reduce your stress levels. And Walker says everyone should be asking their doctor for

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Not that every fix is feasible. It might be easy enough to get help for sleep apnea or start a walking routine. But living next to a highway? That’s harder to fix. And since the past has a way of affecting your present health, comorbidities and medical history like previous head traumas or mid-life obesity will continue to influence your risk factors decades later. The goal, says Walker, is finding out where you stand so you can get to work on the things you can influence. That’s something uMethod offers, and after working with about 5,000 people, Walker has seen this personalized approach to brain health pay off. “Doctors will tell you about their patients who just are quite astonished that they can come back in six months and say, ‘I feel so much better. I’m thinking better,’” he says.

The Future of Preventing and Treating Alzheimer’s The Alzheimer’s Association and others are racing to figure out how lifestyle changes can slow the disease progression, digging down to isolate which activities are most protective, and combining the data with brain scans that will show whether those changes have observable effects on the brain. In the next year or so, there will likely be approval for another two drugs to treat the disease, which VanVlymen hopes will create market pressure and drive prices down. “We’re going to be treating this disease with disease-modifying drugs that, frankly, we’ve never had,” he says. At the same time, scanning for Alzheimer’s will get more accessible and cheaper—and therefore more equitable. And greater access to personalized medicine will help people know exactly what they can do to keep their brains healthy, and how their brains respond to treatments and changes. The future of diagnosing and treating Alzheimer’s disease is full of hope. But when it comes to protecting ourselves and our loved ones, it is empowering to know we don’t have to wait. 1 Alzheimer’s Association, “Alzheimer’s Disease Facts and Figures,” alz.org, 2021 2 Ibid

INVESTMENT FEATURE

INFLATION: WHAT’S IN THE BASKET? by Sam Kirby

In late 2021, after months of growing anticipation about inflation pressures, the closely watched Consumer Price Index (CPI) measure surged to 6.8 percent on a year-over-year basis. The November reading represented a nearly 40-year high and triggered a tsunami of alarming headlines across financial media outlets.

INVESTMENT FEATURE

The U.S. Federal Reserve also took notice. Previously, the Fed’s comments on inflation risks emphasized patience. As the transitory effects of COVID-19 disruptions faded, declining inflation pressures would allow it to gradually taper monetary policy support, allowing time for the labor market to heal. But in its final meeting of the year, the Fed struck a very different tone as it acknowledged growing risks of longer-lasting inflation pressures and announced a more rapid conclusion of the bond-purchase program launched to support economic recovery in 2020. While this abrupt pivot seemed to catch markets off guard, many consumers were far less surprised. They didn’t need a Bureau of Labor Statistics report to know that prices were on the rise. All it took was a trip to the supermarket, gas station, or car dealership to feel the sting of higher prices. However, the extent to which any individual consumer or household felt the tangible impact of rising prices over the past year was driven by their unique pattern of consumption, and their sources of income. While a 6.8 percent CPI print will— very appropriately—grab its share of headlines, the true impact to any individual could be much more or far less.

The fact that everyone’s experience with inflation is unique illustrates the challenge faced by economists as they attempt to gauge price conditions across an entire economy. The CPI is designed to reflect an abstract, average U.S. consumer across different geographies and categories of age, income, and other characteristics. The U.S. Bureau of Labor Statistics accomplishes this with a market basket of expenditures created through tens of thousands of consumer surveys and detailed spending diaries each year. These expenditures represent more than 200 categories of goods and services, organized into eight major groups. The basket of expenditures used to calculate CPI in 2021 was based upon expenditure survey data collected several years ago, in 2017 and 2018. And as shown in Figure One, housing, transportation, and food and beverages combine for nearly three-quarters of total expenditures, making the CPI measure (as well as the average consumer’s pocketbook) particularly sensitive to changes within these categories.

Figure One: CPI Expenditure Weights

Beyond the Headlines Inflation is caused by too much cash chasing too few goods. This can be the result of a hot economy, where jobs are plentiful, wages are high and rising, and consumer sentiment is strong. It can also be caused by supply constraints, such as disruptions in energy markets, supply chain problems, or other interruptions in the normal flow of goods. Or—as was the case in 2021—it can be caused by both. Over the past decade, price inflation within the U.S. economy has been remarkably tame, often failing to reach the 2 percent threshold considered healthy for economic stability and growth. Across an entire economy, the expectation for modestly higher prices tomorrow provides incentives for consumers to buy today, providing support for healthy consumer spending and demand.

Housing 42%

Food and beverages 15%

While that’s the macroeconomic effect, inflation’s impact can vary considerably from consumer to consumer. Those who owe money at fixed interest rates—such as mortgages and car loans—can benefit from inflation, as the burden of fixed payments is reduced over time. In contrast, those whose incomes are represented by fixed payments from savings, bond coupons, or pension payments can see their purchasing power fall. In other words, the true impacts of inflation are highly personal. Ultimately, the presence of price inflation only affects those who choose to or are required to buy at the new, higher prices.

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Transportation 15%

Housing

Transportation

Food and beverages

Medical care

Education and communication

Recreation

Other goods and services

Apparel

Source: U.S. Bureau of Labor Statistics

Often, changes in prices are spread unevenly across these categories of goods and services. This has been particularly true over the last two years as pandemic conditions radically altered consumer behavior and preferences, the production and distribution capacity for goods, and the ability to deliver services amid social distancing requirements. And depending upon where higher prices crop up, extreme price changes within a few categories can have an outsized influence on the overall level of the index. This effect played a major role in November’s CPI measure, as a relatively small subset of expenditure categories tightly linked to the economic reopening—such as fuel and energy—along with categories most affected by supply chain problems—such as autos—drove most of the year-over-year changes in CPI. As shown in Figure Two, the majority of the change in the November CPI was driven by a handful of categories, representing just 14 percent of total expenditures.

Figure Two: November CPI by Category

Sources: U.S. Bureau of Labor Statistics, Bloomberg, CAPTRUST Research. Selected categories, spending as a percentage of adjusted average annual expenditures (less cash contributions and personal insurance and pensions).

Weights and Measures This uneven rise in prices seen over the past year means that different groups of consumers have felt the effects of inflation in very different ways. The dramatic rise in new and used car prices seen in 2021 was primarily felt by the consumers and businesses that needed to buy (or chose to sell) a vehicle. Likewise, expenditure patterns can vary considerably across age, income, and other household characteristics—differences that can be examined in detail with Consumer Expenditure Survey data.

Some spending categories, such as food, don’t tend to vary much across age groups, while others—most notably health care, transportation, and education—can differ significantly.

For example, Figure Three summarizes the 2020 consumer expenditure survey results that break down average consumer spending as a percentage of adjusted average annual expenditures (less cash contributions, personal insurance, and pensions), across a range of age segments. As shown in Figure Three, some spending categories, such as food, don’t tend to vary much across age groups, while others—most notably health care, transportation, and education—can differ significantly. This means that price spikes within specific categories of goods and services can have an outsized impact on certain groups. The availability of such detailed data on consumer expenditures allows us to adjust or reweight the November CPI data to illustrate the impact of inflation on different groups of consumers. Figure Four paints a picture of a very different inflation experience across different groups—even when limited to the broad brushes of age and income. When reweighted by differences in spending patterns, price pressures over the past year have been felt most acutely in households that are younger and within the middle- to highincome bands. 29

Figure Three: Spending by Category and Age 25%

20%

15%

10%

Food Under 25 years

Apparel and services 25-34 years

Transportation 35-44 years

45-54 years

Healthcare 55-64 years

Entertainment 65-74 years

Education 75 years and older

Sources: U.S. Bureau of Labor Statistics (September 2021), CAPTRUST Research

Note that reweighted CPI across all income and age groups of 7.6 percent differs from the November CPI reading of 6.8 percent. This difference is driven by differences in calculation weights due to the different time periods of the expenditure surveys, as well as differences in the populations surveyed (urban consumers for CPI vs. all consumers for the 2020 expenditure data). Not surprisingly, the differences in inflation experience across groups is primarily driven by the degree to which each group is exposed to the categories (notably, transportation) that have experienced surprising price increases over the past year. Across income segments, the group with the largest share of transportation costs relative to income was the seventh decile, which includes those with 2020 before-tax income between roughly $76,000 and $96,000. When the November CPI results by category are applied to this group, their effective inflation jumps to nearly 8.5 percent. Across income segments, the group with Similarly, younger consumers tend to spend more of their paychecks on transportation costs relative to older cohorts. Given the complexion of inflation over the past year, this means that younger consumers may have felt the effects of higher prices the most.

the largest share of transportation costs relative to income was the seventh decile, which includes those with 2020 before-tax income between roughly $76,000 and $96,000.

The simple exercise above focuses on just one side of the ledger—expenditures—and does not reflect changes in income. If the wages for younger workers increased more than those of other groups, they may still be better off. However, it is still useful in thinking about which groups are more exposed to pockets of inflation as economic conditions change. If inflation pressures were to shift from transportation to health care, for example, as auto prices return to earth while the healthcare system continues to deal with lingering effects of the pandemic, then the inflation burden will likely shift toward older consumers.

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But the key takeaway is that everyone’s consumption basket—and therefore their personal inflation experience—is a little different. Like any economic statistic, CPI is an abstraction of a system that’s far too complex to summarize with a single number, in the same way that no one would use the average daily temperature of the entire country to decide what to wear outside this morning. The experience in Phoenix and Anchorage will be very, very different.

Inflation and the Investor As we move into 2022, there are reasons to believe that many of the inflation pressures described above will begin to ease as pandemic-altered consumption patterns and supply challenges continue to resolve. On the other hand, rising wages and rents may provide continued upward pressure on prices—and as illustrated earlier, changes across categories can affect different groups of people in very different ways. But in addition to the inflation concerns of consumers are those of investors. Over the past year, one of the most common questions we’ve heard from investors of all types is: What can we do today to protect portfolios against inflation? As is so frequently the case with investment strategy, there is no silver bullet. Part of the reason for this is a simple timing mismatch. By its very nature inflation is a long-term threat, which means it cannot be fully addressed with short-term tools. Some of the most commonly cited tools in the inflation toolkit— such as inflation-protected bonds, commodities, and gold—have shown an ability to react to short-term changes in inflation expectations but may also expose investors to other unintended risks or otherwise harm the total portfolio’s long-term return potential. Attempts at market timing often do more damage than good, and it can be shortsighted to reposition a portfolio for uncertain shortterm risks at the expense of long-term success.

Figure Four: Reweighted November 2021 CPI, by Income Decile and Reweighted November 2021 CPI by Age 8%

All Income Decile s

7% CPI-U

All Age Groups

7% CPI-U

Under 25

25 - 34

35 - 44

45 - 54

55 - 64

65 - 74

75 and older

Sources: U.S. Bureau of Labor Statistics, Consumer Expenditure Survey (September 2021), Consumer Price Index for All Urban Consumers retrieved from FRED, Federal Reserve Bank of St. Louis, CAPTRUST Research1

For long-term investors, the single best way to combat inflation is to seek to outgrow it via a diversified growth portfolio that is in line with their goals and risk tolerance. But what investors can do today is think about what’s in their basket and how their consumption and income patterns are likely to change over time. In this way, inflation represents more of a planning problem than an investment problem, subject to a wide range of behavioral and cognitive biases, which, incidentally, are covered later in this issue. In his latest installment of Money Mindset, VESTED Editor-in-Chief John Curry explains the insidious effects inflation can have on our thinking and long-term financial plans—if you let them. “What’s So Bad About Inflation?” explains two cognitive biases that could lead to a big underestimation of the savings needed to fund long-term goals—or an overestimation of your future purchasing power. 1

Note that reweighted CPI across all income and age groups of 7.6% differs from the November CPI reading of 6.8%. This difference is driven by differences in calculation weights due to the different time periods of the expenditure surveys, as well as differences in the populations surveyed (urban consumers for CPI, vs. all consumers for the 2020 expenditure data).

MARKET REWIND

CHOPPY QUARTER CAPS STELLAR YEAR FOR U.S. STOCKS Despite bouts of volatility fueled by virus and policy uncertainty, supply chain woes, and inflation worries, most asset classes posted solid returns in 2021, led by economically sensitive sectors that benefitted from reopening trends. Emerging markets stocks were roiled by China policy and growth concerns, and core bonds moved sideways as bond yields ticked modestly higher. • U.S. large-cap stocks delivered solid returns for the quarter and finished 2021 with a gain of nearly 29 percent for a third consecutive year of outsized returns. Small-cap stocks lagged their large-cap peers but still posted double-digit returns. • International developed market stocks also posted healthy returns for the year, even as China risks cast a dark cloud over emerging markets. • Fueled by a rebound in oil prices, commodities advanced by more than 27 percent for the year despite a fourth quarter pullback amid rapid spread of the omicron variant. • Public real estate added to gains in the fourth quarter despite continued virus concerns, following steady advances over the course of the year. • Core bonds treaded water in the fourth quarter (and the full year) as bond yields shrugged off inflation concerns with a modest uptick.

MARKET INDEX PERFORMANCE (as of 12.31.2021)

Emerging Markets Stocks

U.S. Bonds

Developed International Stocks

U.S. Small-Cap Stocks

Commodities

U.S. Large-Cap Stocks

Real Estate 39.0%

28.7% 27.1% 14.8%

14.6%

11.8%

2.7%

11.0% 2.1%

0.0% -1.2%

-2.2%

Q4 2021

-1.5%

-1.6%

YTD 2021

LOOKING FORWARD Healthy consumer balance sheets, an improving employment picture, and record corporate profits remain in place for continued economic growth. However, concerns around the Omicron variant may muddy the path of Fed and fiscal policy. The Fed, which recently announced a faster wind-down of its bond-buying program, must balance taking its foot off the monetary policy accelerator to relieve near-term inflation pressures while maintaining tools to manage longer-term threats. While a significant virus mutation could threaten the trajectory of the economic recovery, each successive virus wave has had less economic impact than the one before. In the meantime, we’ll be monitoring for emerging virus variants, inflation pressures, legislative activities, and geopolitical flare-ups. Asset class returns are represented by the following indexes: Bloomberg Barclays U.S. Aggregate Bond Index (U.S. bonds), S&P 500 Index (U.S. large-cap stocks), Russell 2000® (U.S. small-cap stocks), MSCI EAFE Index (international developed market stocks), MSCI Emerging Market Index (emerging market stocks), Dow Jones U.S. Real Estate Index (real estate), and Bloomberg Commodity Index (commodities).

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MONEY MINDSET

WHAT’S SO BAD ABOUT INFLATION? by John Curry

We’ve been hearing a lot about inflation lately, but what’s all the hype about? Some of it is practical. Restarting the global economy after the COVID-19 shutdown has not come without a few hiccups that have dramatically affected the prices of some goods and services—food, energy, automobiles, and transportation services to name just a few. 33

Meanwhile, the prices of stocks and real estate have risen to new heights, thanks to the Federal Reserve’s easy money policies and government stimulus checks. Interest rates have ticked up slightly—from historical lows—further adding to inflation anxiety.

Zero Sum Inflation is a complicated thing and, like most things macroeconomic, tends to be a zero-sum game—where one person wins only at the expense of causing someone else to lose. Rising wages benefit workers—especially workers in industries hard hit by the pandemic and workers who have not seen meaningful wage increases in recent years. This, of course, means that consumers pay more for the goods and services they consume. Meanwhile, rising real estate prices are good for homeowners, but rising rents put pressure on renters’ household budgets. And rising interest rates generate more interest income for savers, but borrowers pay more on their mortgages, credit cards, and car loans. Whether inflation is a good thing or a bad thing for you really depends on your specific facts. And the complexity of the equation for your household makes it difficult to predict the impact.

Times They Are A-Changin’ Over the past decade, interest rates have been stuck at historically low levels. In fact, along the way, fears of deflation and negative interest rates repeatedly made the headlines, and policy makers wondered what it would take to get back to a healthy level of inflation.

As we sit on the verge of a potentially new and higher inflation regime, it’s important to understand two cognitive biases that become more relevant.

Along the way, investors, including many nearing or in retirement, struggled to generate income from their portfolios. They were forced to accept lower returns—at least on the fixed income portions of their portfolios—or take more risk to achieve their goals. Thankfully, those who took more risk by investing in stocks were handsomely rewarded (despite a few white-knuckle moments along the way). Further, while the low-rate environment created income challenges for retirees, they benefited from low inflation during this period. So, even as they shifted to stocks and other riskier investments that generated higher returns, the cost of living barely budged, allowing standards of living to rise. According to Morningstar, a simple portfolio of 45 percent U.S. stocks, 15 percent international stocks, and 40 percent bonds, rebalanced quarterly (fees and taxes aside), would have returned more than 8.8 percent over the decade from 2011 to 2020 while inflation ticked up at a mere 1.73 percent. Now, it seems that we are entering a new chapter. As inflation and interest rates creep higher, bonds and other fixed-income investments may, at some point, become more appealing. (This, of course, assumes we don’t see a rapid rise or a dramatic spike in rates.) That’s certainly good news for investors, but they should be careful to consider their financial plans before they make any hasty moves.

Out of the Frying Pan As we sit on the verge of a potentially new and higher inflation regime, it’s important to understand two cognitive biases that become more relevant. Money illusion is the name for a bias that describes humans’ tendency to think about their wealth and income in nominal dollars—today’s value—rather than real dollars that include the impact of inflation on tomorrow’s purchasing power. The money illusion anchors us to the value of money today and makes it hard for us to

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grasp, for example, what $100,000 of income will buy us in 10 years. At a 2 percent inflation rate that $100,000 will have only $83,400 of purchasing power in 2031. At 3 percent inflation, that number shrinks to $76,000. Exponential-growth bias is our tendency undervalue the effects of compound interest. For investments, this means we tend to underestimate future values. For inflation, it means that we overestimate the value of our purchasing power of our savings. Because we are very bad at these calculations, our errors can be massive, especially over long periods of time or at high rates. And, of course, a financial plan for a couple age 65 retiring today should anticipate 30 years of income in retirement. That qualifies as a long period of time.

Thankfully, the creeping nature of inflation means that you have time to address the risks and plan accordingly.

While these two biases may sound similar, they are recognized as separate behaviors, and, unchecked, they could lead to a big underestimation of the savings needed to fund long-term goals—or an overestimation of your future purchasing power. One simple way to help overcome these biases and better understand inflation’s impact on your money is the rule of 72. Divide 72 by the annual inflation rate. The resulting number is how many years it will take to cut your purchasing power in half. For example, at a 3 percent sustained inflation rate, your purchasing power will be cut in half in 24 years compared to 41 years based on the 1.73 percent average inflation rate we experienced during the 10 years before the COVID-19 pandemic. That’s a pretty dramatic change for a relatively small inflation uptick.

A Change (Would Do You Good) Thankfully, the creeping nature of inflation means that you have time to address the risks and plan accordingly. Here are a few tips to help make sure that your financial plan remains on solid ground, whatever the future might hold for inflation. •

Revisit your plan. It is wise to update your financial plan every three to five years—or more often in the event of a significant change to your financial picture or the market environment. Should we determine that the recent surge of inflation will stick around, you should contact your advisor to update your financials and rerun your plan to help ensure that it still makes sense.

•

Do a shock test. As boxer Mike Tyson famously said, “Everyone has a plan until they get punched in the mouth.” Make sure your plan includes multiple scenarios, including extreme inflation scenarios, living to 100 (or older!), or a significant market sell-off during retirement—whatever you need to test to make sure you’re going to sleep at night.

•

Reserve the right to reassess. Financial planning is not a set-it-and-forget-it endeavor. It’s an iterative process, and you can adapt along the way, as needed. If you determine that rising inflation creates risk for your plan, you may decide to work a few more years, save a little more, spend a little less, or accept the risk, knowing that you can take another look in a year or two.

At present, it is difficult to know how the recent rise in inflation will play out. We may just be experiencing a short-term bout of inflation. Or this may be the beginning of something longer-term. Perhaps we will encounter a mixed scenario, where we see sustained price increases in some areas of the economy while others abate. Regardless, with a solid plan in place—and the ability to adjust, as needed, to conditions—you will be well on the road toward your long-term financial goals.

LASTING LEGACY

STOP AN HEIR WAR by Jeanne Lee

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In Hollywood movies, when a patriarch or matriarch dies, the relatives gather to find out what money or valuables they’ve inherited. Then, someone gets greedy and causes an all-out family squabble. In real life, however, the dramas that erupt around inheritance are surprisingly often not about the money.

jacket, or the holiday ornaments that were used year after year. Sentimental items may have little or no monetary value, so they’re not included in a will. Yet they may be loaded with memories and tremendous emotional significance and have the potential to cause family discord. “If not talked about ahead of time, then it could cause unnecessary stress in relationships,” says Orlando.

Instead, it’s the personal items left behind by the family member that can have the most potential to trigger hurt feelings between siblings or heirs.

Plan a Family Conversation

Take the case of film legend Audrey Hepburn. Like many parents, she left instructions for her worldly possessions to be divided equally between her two sons after her death. Unfortunately, she didn’t foresee that her children would be unable to agree who would get which of the memorabilia items, including the scarves, hats, and gloves that Hepburn had worn with such inimitable glamour. More than 20 years later, a treasure trove of her costumes and other belongings remained in a storage locker as her sons battled it out in court, according to press reports. After a parent’s death, family tempers can flare over beloved objects even when all parties are satisfied with the distribution of the financial assets. It’s often the case that “so much of the estate planning is focused on the large financial assets,” says Richard Orlando, Ph.D., founder and legacy consultant at Legacy Capitals and the author of Legacy: The Hidden Keys to Optimizing Your Family Wealth Decisions. When a parent or grandparent leaves no clear plan for personal assets that carry a great deal of family history and meaning, a rift can be all the more likely. That’s because decisions about distributing them will then have to be made once someone has passed away— when emotions are high. What happens if more than one person feels attached to, say, the piano that was used for childhood lessons and family celebrations, and the parent is no longer around to referee? Families take great care in making sure wills and estate plans account for Dad’s individual retirement account, real estate investments, or family business holdings. Yet many neglect to spell out a parent’s final wishes for personal or household belongings. Too often, families just never get around to discussing the distribution of personal items like a special jewelry box, a favorite

No parent or grandparent wants strife and legal fees to be their legacy. That’s why it’s worth setting aside some time to consider your own personal items and how you would want them distributed after you’re gone. It’s a favor to your heirs to make decisions about personal property ahead of time. Here are some steps to consider in planning for distributing personal assets.

Find a time to have a family conversation about which items the next generation might be interested in, whether that’s a collection of baseball cards or a piece of artwork. Don’t assume you know who wants what. “Some family members might be interested in the sentimental value of jewelry that has been passed down, or the grandfather clock, and others are focused more on the monetary value of items,” says Orlando. To start with, let your kids and relatives know that it is just an initial discussion. “Everything doesn’t need to be worked out to every item having a sticker on it saying, ‘This will go to John,’” Orlando says. Instead, the goal is more to establish your baseline intentions and perhaps set the scene for future conversations as your family grows and changes over the years.

Establish your baseline intentions and perhaps set the scene for future conversations as your family grows and changes over the years. “Even if the parents make the final decisions, it’s typically a good idea to at least get the pulse of their rising generation’s hopes and questions,” says Orlando. “If the family believes it will be helpful, a third party can facilitate the conversation and process for the family, culminating with it being codified via an attorney.”

Use a Personal Property Memorandum One way to codify your wishes is through a personal property memorandum. While you can certainly make specific bequests in your will—like leaving a vintage dollhouse to your niece—it can be a good idea to create a separate document if you have many special belongings that you want to give instructions for. This memorandum is simply a list of things with the people you want to receive them. By spelling out which child or family member

gets which items, you save your heirs from having to negotiate among themselves. For example, you might list particular pieces of furniture, art, photos, or household items with the name of the desired recipient. You would not list financial assets, such as money, stocks, bonds, or real estate, in this type of document. When making the list, it’s fine to type it and print it or just write it out by hand. Be careful to describe the items in enough detail to avoid any confusion. Also, don’t contradict instructions you’ve left in your will. Your list needn’t account for every single item, but overall wishes and intentions should be captured, says Orlando. In about 30 states, you can then make the personal property memorandum legally binding by specifically mentioning it in your will. Be sure to sign and date the list, because if you end up changing it later, the document with the latest date will be the one that’s used. Keep this document together with your will.

Write a Letter of Instruction Unlike a will or a personal property memorandum, a letter of instruction is not a formal legal document. It’s a personal letter expressing your wishes. You can use one to clarify what you want done with specific items. While not legally binding, it allows your heirs to understand exactly which heirlooms or property should go to which relative.

In about 30 states, you can make the personal property memorandum legally binding by specifically mentioning it in your will.

In addition to specifying the distribution of personal property, your letter of instruction can include many other types of preferences and information. You can spell out your hopes for how your children will spend their inheritance, what you want done with your social media accounts, or what your cherished values and beliefs are that you’d like to pass down to your heirs. You can also include directions for the care of your pets or the charities you’d like to support. This is a personal letter to your family, so feel free to include any messages you want to convey.

Gift Items During Your Lifetime Another popular strategy is to gradually give your personal items or financial assets to your children so they can enjoy them during your lifetime—and you get to witness their pleasure. For example, pass on jewelry, furniture, or a portion of financial assets as a wedding gift, or give some items to each child every year on their birthday. Doing so also gives you an opportunity to test the waters. You can present a certain amount of assets to your kids as a way to see how they will steward them. “It might point out how ready and mature an adult child is, or maybe that they need a little more mentoring and education. Or maybe it goes sideways, and the parent has time to update their estate plans accordingly,” says Orlando. If you make such gifts, be aware of the potential tax consequences for items of value. The federal gift tax exclusion is $16,000 in 2022. It’s important to plan for your financial assets in your estate plan and will, but that’s not the only area where you should make your preferences known. By making the effort to organize your wishes for your personal belongings, valuable or not, you might be providing your heirs with another gift—that of family harmony, long after you’re gone.

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CLIENT CONVERSATIONS CLIENT CONVERSATIONS

READER Q & A In this installment of Client Conversations, we explore the unique benefits of nonqualified defined contribution plans, look at options for

covering healthcare costs in early retirement, and provide some insights on surging home prices and the drivers behind them.

I have been offered the chance to participate in my company’s nonqualified deferred compensation plan. Is that something I should consider?

Nonqualified deferred compensation plans can be an effective way to boost retirement savings, but the decision to participate depends on your personal financial circumstances. For example, you should think twice about participating if you are not already taking full advantage of your company’s 401(k), including maxing out your contributions (plus a catch-up contribution, if you’re eligible). You might also want to fully fund your health savings account (HSA), if you have access to one, before you start nonqualified plan contributions. Of course, with today’s tight labor market, you probably wouldn’t want to participate if you think you might leave your company since these plans are for long-term savings—and that would likely trigger a distribution. But if your 401(k) and HSA are maxed out and you want to defer more pre-tax dollars, it’s worth a look. Let’s talk nonqualified deferred compensation plans. A nonqualified deferred compensation plan is an arrangement between an employer and employee that allows the employee to defer receipt of currently earned compensation. Employers can also make contributions to participant accounts. Because these plans are not required to comply with many of the rules that govern qualified plans—like 401(k) plans—they can offer appealing options in terms of contribution amounts, investment options, and distribution options. Unlike cash compensation that is taxed in the current year, deferred compensation plans generally aren’t subject to federal income taxes until you begin receiving distributions from the plan. So, contributing can both reduce your current tax bill and boost your savings. 39

So far, that sounds pretty good, right? What’s the downside?

A nonqualified deferred compensation plan is an arrangement between an employer and employee that allows the employee to defer receipt of currently earned compensation.

Probably the biggest consideration is that, unlike your 401(k) account, the compensation that you defer into the plan is not your money. This means that, when it comes time for you to receive the compensation you deferred, your employer may be unwilling or unable to pay the amount or that a creditor may seize the funds through foreclosure, bankruptcy, or litigation. Typically, employers set aside funds deferred, but they remain part of the general assets of the company, subject to the claims of creditors.

That said, your employer may also take steps to help make you comfortable that your funds (plus earnings) will be there when you need them, including setting assets aside to pay your future benefits and securing them in a rabbi trust. An irrevocable rabbi trust, adequately funded, can help provide you with the assurance that your benefits will be paid in all events other than the insolvency or bankruptcy of your employer. Nonqualified deferred compensation plans offer unique benefits and come with some important considerations, so they are not right for everyone. As always, you should speak with your financial and tax advisors about your company’s plan and your personal financial situation before you make any decision to participate.

I am thinking about retiring early. How can I cover healthcare costs if I retire before I am eligible for Medicare at age 65?

Congratulations! If you’re considering early retirement, hopefully this means that your years of saving and investing well have resulted in a nice nest egg that— combined with Social Security and other income sources—will allow you to maintain your lifestyle without career work. Given the cost of health care and the growing need for medical care as you age, it’s important to have some form of health insurance coverage. And, if you retire before age 65, you’ll want a plan to cover medical costs until Medicare kicks in. If you are being offered an early retirement package from your employer, check to make sure that it includes post-retirement medical coverage. Often, these packages provide medical coverage until you reach age 65 and become eligible to receive Medicare. If your package does not include post-retirement coverage—or if you’re just plain retiring early—you will have several options for health insurance. One easy option: If you’re married and your spouse is still working, you may be able to secure coverage through his or her employer. Otherwise, you can explore coverage through the Consolidated Omnibus Budget Reconciliation Act (COBRA) or private health insurance to close the gap to Medicare eligibility age. COBRA only provides temporary benefits—up to a maximum of 18 or, in some cases, 36 months—but that may be enough for you. And private health insurance premiums

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can be expensive, depending on factors such as your age and health status. You may also be able to find and purchase an individual health insurance policy through either a state-based or federal health insurance Exchange Marketplace. Once you have found coverage, remember that money that you have saved in an HSA can be used to pay insurance premiums and other qualified medical expenses tax-free. Tapping into those funds, if you have them, could close—or at least narrow—the gap if you need private insurance for a year or two. Lastly, while working during your early retirement may not be part of your plan, taking a different or part-time job to keep health insurance might be an option.

Home prices in my area have been booming. Why is this happening, and do you expect it will continue?

This question is on the minds of many Americans—partly because of the prevalence of home ownership in the U.S. and partly because it’s hard not to notice surging home prices. On average, U.S. home prices have climbed 4.1 percent on an annual basis since 1987, according to Fortune magazine. However, in its latest forecast, Fannie Mae indicated that it expects median home prices to rise 7.9 percent between the fourth quarter of 2021 and the fourth quarter of 2022—twice the long-term average. There are several drivers of this phenomenon. But, as always, market behavior comes down to supply and demand. There has been too much demand for the supply of available homes. The housing supply has been low for more than a decade. The housing crash in the late 2000s devastated the construction industry, and a variety of factors, including labor shortages, tariffs, limited land, and restrictive permit processes, have kept the supply of new homes below historical averages. This placed more pressure on existing homes to meet demand from prospective buyers. More recently, with the shift to remote work and education and low interest rates, many people looked for more space. This increase in demand happened as pandemic-induced labor

shortages, supply-chain issues, and rising raw material costs stymied construction of new homes. At the same time, homeowners who might have seen high prices as an opportunity to sell were hesitant to do so because of economic uncertainty and the high cost of moving to another home. Refinancing to lower mortgage payments or cash out kept some homeowners in place. And government mortgage forbearance programs have kept families from losing their homes through the pandemic but also kept homes that might have otherwise been foreclosed on off the market. The pandemic also made it less appealing to have strangers entering a home for an open house. And older people who might have moved into assisted living or other senior facilities were more likely to stay in their homes. Taken together, these factors produced a perfect storm of low supply and high demand that drove already high prices to dizzying levels and created desperation among buyers. In fact, prices are so high some buyers are backing off. But demand remains strong and will outstrip housing supply for the foreseeable future. Near-term relief might come if high prices inspire more homeowners to sell and if the end of government programs puts more foreclosed homes on the market.

If you have a question for the VESTED team, we’d love to hear from you and see if we can help. Please send your questions to us at VESTEDmagazine@captrust.com.

CAPTRUST HAPPENINGS

GIVING BACK Year-end Wrap-up During 2021, the CAPTRUST Community Foundation (CCF) provided more than $1,000,000 in financial support to more than 170 deserving charities serving the needs of children around the country.

This year, CCF raised $630,000, and 326 colleagues volunteered for CCF mission-focused events. Included in this amount was a $100,000 donation to Note in the Pocket, our 2021 Charity of Choice. Since 2013, Note in the Pocket has provided clothing to over 20,000 impoverished individuals, mostly children. Last year, 2,200 volunteers helped process more than 158,000 pounds of donated clothing. Through that community support, Note in the Pocket has been able to deliver 109,103 items of clothing to 4,573 individuals. Additionally, each year, CAPTRUST collects applications from charitable organizations throughout the country that support the CCF’s mission. Each qualified applicant goes through a strenuous vetting process and, if selected, will receive one of three $25,000 grants. This year’s national grant award recipients are Families Together, Durham Children’s Initiative, Rainbow Village, AMIKids, and Sleep in Heavenly Peace.

• A Child’s Haven • A.G. Gaston Boys & Girls Club • AMIKids Tampa • Acres of Hope • Amazement Square • American Cancer Society Gold Together Champions Campaign • American Red Cross • American Red Cross—Caldor Fire Relief Fund • American Red Cross of Massachusetts • Assistance League of Ventura County • Augustine Literacy Project® of the Triangle • Austin Sunshine Camps • BASE Camp Children’s Cancer Foundation • BackPack Beginnings • Best Buddies International • Beverly’s Birthdays • Big Brothers Big Sisters of Greater Pittsburgh • Bottom Line • Boys & Girls Clubs • Boys & Girls Club of Easton • Boys & Girls Clubs of Greater Kansas City • Boys & Girls Club of Santa Clarita Valley • Boys & Girls Clubs of Southwest Virginia • Boys & Girls Clubs of the Coastal Plain • Bradley Free Clinic • Broken But Not Destroyed • Bucks County Opportunity Council

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• CASA of Travis County • Camp Aranzazu

• Extra Special People • Families Together

• Capital Quilters Guild

• Family House

• Catholic Community Foundation Archdiocese of New Orleans

• Feed Kids First • FeedMore

• Chapters Health Foundation

• Food Bank of Eastern Michigan

• Cheyanna’s Champions 4 Children

• Foster Care Support Foundation

• Chicanos Por La Causa

• Foundation Communities

• Children’s Brain Tumor Foundation

• Franciscan Health Foundation

• Children’s Home Network

• Freedom for Youth Ministries

• Claris Health

• Friends of Karen

• Clayton High School Band Boosters

• Friends of the Children—SF Bay Area

• Conservancy of Southwest Florida

• Friendswood ISD Education Foundation

• Cristo Rey Research Triangle High School

• 4-H Club of Minnesota

• Cystic Fibrosis Foundation—Sacramento Chapter

• God’s Love We Deliver

• Dana-Farber Cancer Institute

• Greater Dayton Volunteer Lawyers Project

• Duneland Family YMCA

• Great Trail Council, Boy Scouts of America

• Durham Children’s Initiative

• Habitat for Humanity of Southern Santa Barbara

• Eagle Ranch

• Habitat for Humanity of Summit County

• El Dorado Community Foundation

• Hale Kipa

• Elevate Phoenix

• H.A.L.O. Foundation

• Emmaus House of Raleigh

• Hands4Hope

• Equi-librium

• Haven for Hope

Foundation Board Members CCF is pleased to welcome eight new board members who will serve two-year terms. The board welcomes new members Elizabeth Altman, Kara Chase, Melissa Colley, Veronica Karas, Oliver Norman, Nathan Erickson, Juanita Evans, and Cheryl Wickham. CCF president Philip D’Unger will be supported by the following board officers in 2022:

The Salvation Army Angel Tree program specifically focuses on fulfilling the biggest need: clothing items for children up to age 12. In December, CAPTRUST colleagues provided clothes and toys to 210 children.

• Kim Griggs-Murray Vice President

• Kara Chase Event Chair

• Michelle Miller Volunteer Chair

• Cheryl Wickham Secretary

• James Stenstrom Grants Chair

• Elizabeth Altman Marketing Chair

• Melissa Colley Treasurer

• Ashley May Fundraising Chair

• Veronica Karas Financial Literacy Chair

• Heart Math Tutoring

• Peabody Charter School Foundation

• Steelhorse Strangers Motorcycle Club

• Helen DeVos Children’s Hospital Foundation

• Pediatric Cancer Foundation of the Lehigh Valley

• Stewart’s Caring Place

• Plant Theatre Company Booster Club

• Sussex Montessori School

• Helping Horse • Hemisfair Conservancy • Hill School of Fort Worth • Hope Reins • Hope’s Door New Beginning Center • Humble ISD Education Foundation • Integrated Family Community Services • Interfaith Outreach & Community Partners • Iowa FFA Foundation • Island Harvest • Jubilee Family Development Center • Judson Center • just keep livin Foundation • Key Program • Kim’s Open Door • Lawakua Charitable Fund

• Poe Mill Achievement Center • Polka Dot Mama Melanoma Foundation • Positive Tomorrows • QuickStart Tennis of Central Virginia • Rainbow Days • Rainbow Village • Raleigh Dream Center • Raleigh Moravian Preschool • Read and Feed • Riverside Community College District Foundation • Rockbridge Area Relief Association • Ronald McDonald House Charities Charlottesville

• Leukemia & Lymphoma Society

• Ronald McDonald House Charities of San Antonio

• LGBT Center of Raleigh

• Ronald McDonald House Charities

• Libera West Virginia

• Roots Charter High School

• Life Enrichment Center

• SCO Family of Services

• MBA Opens Doors Foundation

• SPCA of Florida

• Merced Housing Texas

• SPIRIT Open Equestrian Program

• Mercy Foundation—Cristo Rey High School

• Safe Families for Children

• Miami Valley TREEcovery

• San Antonio Learning Through Tennis

• MOXI

• Sawyerville

• National Multiple Sclerosis Society

• Second Harvest Food Bank

• Nebula Dance Lab

• Sid Jacobson Jewish Community Center

• New Alternatives for Children

• Sleep in Heavenly Peace

• North Texas Food Bank

• Small Miracles Foundation

• Note in the Pocket

• Soles of Luv

• Orchard Place

• South Florida Crime Commission

• Pajaro Valley Prevention and Student Assistance

• Special Olympics

• Park View Community Mission

• St. Mary’s Center for Women and Children

• Pathway Caring for Children

• Spread Your Wings • Starts Right Here

• Summer Search • The Center for Family Justice • The Dayton Foundation • The Dee Howard Foundation • The Harrelson Center • The Independent College Fund of North Carolina • The Legal Aid Society of San Mateo County • The Mentoring Partnership of Southwestern PA • The Roman Catholic Diocese of Baton Rouge • The Up Side of Downs of Northeast Ohio • Time Out Youth • Todos Juntos Learning Center • Together We Can Community Resource Center • Truth in Nature • United Cerebral Palsy of Greater New Orleans • United Way of Summit County • Urban Ministries of Wake County • Valiant Cross Academy • Variety—the Children’s Charity of Iowa • Virginia Hemophilia Foundation • Vogel Alcove • WakeEd Partnership • Washburn Center for Children • White Pony Express • Wildwood Hills Ranch of Iowa • YMCA of the Triangle • YWCA Corpus Christi • Young Men’s Christian Association of Greensburg

CAPTRUST GROWTH We are pleased to announce seven new regional offices and six new financial advisors. New Offices in Texas and Oklahoma

NEW COLLEAGUES Brittany Robertson

Matt Leggett

CAPTRUST welcomed Brittany to its Raleigh, North Carolina, office in November. As a financial advisor and relationship manager, she provides investment advisory services to highnet-worth individuals and families. She joined CAPTRUST from Erickson Advisors. Brittany earned a Bachelor of Science degree in finance from Virginia Polytechnic Institute and State University.

Matt was with CAPTRUST for more than 10 years before becoming a financial advisor in December. Based out of the firm’s headquarters in Raleigh, North Carolina, he brings over 15 years of experience in the financial services industry. As a wealth management senior financial advisor, Matt is responsible for providing investment advisory services to high-net-worth individuals and families.

Will Moody

Jamie Lynch

As a wealth management financial advisor based in Charlotte, North Carolina, Will works alongside our high-net-worth individuals, families, and institutional clients to address their present and future financial needs. He joined CAPTRUST in November from Bank of America, where he served as vice president of corporate strategy and development. He earned a Bachelor of Science degree in financial management and real estate investment from Clemson University.

Jamie is an institutional advisor based in Des Moines, Iowa. He brings over 20 years of experience in the financial services industry. Jamie joined us from Wells Fargo, where he served as vice president of relationship management. He earned a Bachelor of Arts degree in business administration and marketing from Graceland University and a Master of Business Administration degree from the University of Iowa.

Brian Miserlian

Ronald Heath

Brian is a wealth management financial advisor based in Denver, Colorado. He is responsible for providing investment advisory services to high-net-worth individuals and families. Brian joined us from Fidelity Investments. He earned a Bachelor of Arts degree in finance and financial management services from Michigan State University.

Ronald is a wealth management financial advisor based in Los Angeles, California. He brings over 30 years of experience in the financial services industry. Ronald joined us from Equitable Advisors. He earned a Bachelor of Science degree from University of California, Berkeley, and a Master of Business Administration degree from the Golden Gate University.

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Covenant Multifamily Offices (Covenant) became part of CAPTRUST in September. With offices in San Antonio, Dallas, and Boerne, Texas, as well as Oklahoma City, Oklahoma, the wealth management firm brings to CAPTRUST more than $2.6 billion in assets across more than 500 clients. The team is led by Founder and Managing Director John Eadie, along with Barry Beal, Justin Pawl, and Karl Eggerss. Forty-four team members also joined CAPTRUST.

New Office in Massachusetts Boston-based RINET Company (RINET) joined the firm in November, bringing more than $2.2 billion in assets to CAPTRUST. Founded in 1974, RINET has a comprehensive offering for high-net-worth clients, as well as a robust suite of family office services. The team is led by Brian Rivotto, Gary Savage, and Rebecca Pouliot, who have joined CAPTRUST, along with 26 additional colleagues.

New Office in Tennessee Nashville, Tennesseebased New Market Wealth joined the firm in December. The company is led by Principal Daryl Deke and brings to CAPTRUST our first brick-and-mortar location in Nashville. Since its founding in 2014, New Market Wealth has steadily built a loyal and growing clientele. The firm brings nearly $275 million in assets.

CAPTRUST RECOGNITION New Office in Louisiana Crescent Capital Consulting (Crescent) was the tenth firm to join CAPTRUST in 2021. With nearly $1.5 billion in assets and headquartered in New Orleans, Louisiana, Crescent provides investment management services to institutions, as well as high-net-worth and ultra-high-net-worth families. The firm is led by President Andrew Wisdom and Executive Vice President Bryan Fitzpatrick. They have joined CAPTRUST, along with 17 other colleagues. 2021 Brick Award Winners CAPTRUST presented its annual Bricks of Success Awards at the company’s Advisor Kickoff held in January. Award nominations and final voting are employeedriven, and the awards recognize employees and contributions that exemplify the very best of our company’s values, mission, and vision. Winners were presented with an engraved marble brick, symbolizing that our best colleagues are the building blocks of CAPTRUST’s culture and that any great company is built one brick at a time. Congratulations to this year’s Bricks of Success Award winners in the following categories: CLIENT SERVICE

STEP-UP

Jason Bart Justin Gartman Teri Halasz Catherine Mitchell

Elizabeth Banda

Teresa Samperi

Veronica Willoughby

Jennifer Brown Cara Cannon

Excellence Award The Excellence Award is a way for CAPTRUST associates to recognize colleagues who go above and beyond and consistently perform at the highest levels. The award winners represent an elite group whose attitudes and performance have positively impacted CAPTRUST’s clients and company. The Excellence Award winner for the fourth quarter of 2021 is Catherine Mitchell.

Catherine Mitchell

Senior Specialist | Wealth Management

NAPA Aces

The National Association of Plan Advisors (NAPA) recently announced its 2022 list of Top Retirement Plan Advisors Under 40—also known as Aces. NAPA launched this list in 2014 to highlight young advisors at registered investment advisors and broker-dealer partners. CAPTRUST’s Erica Blomgren, Keaton Brewer, Kevin Chang, Patrick Flint, Timothy Irvin, Paul Stibich, Jeremy Tollas, and Emily Wrightson were among the 100 advisors named to the list.

Fast 50

The Triangle Business Journal recently ranked CAPTRUST eighth among the 50 fastest-growing private companies in the Raleigh, Durham, Chapel Hill area. This year’s ranking improved from tenth in 2020 and marks the ninth year CAPTRUST has made the list. The Fast 50 winners were selected and ranked based on a formula that counts revenue growth and profitability in the preceding three years.

Aisha Palma

COMMUNITY SERVICE Ken Carter Kimberly Griggs-Murray Tiffany Larew Michelle Miller David Wahlen

MOST VALUABLE PLAYER Christina Markell-Balleza

Top Women Advisors

NAPA announced its 2021 Top Women Advisors list. The list acknowledges the contributions of a growing number of women who are making significant contributions to the retirement industry and bringing excellence to their profession. This year, 14 CAPTRUST advisors were on the list: Taria Agbelusi, Beryl Ball, Deanna Bamford, Erica Blomgren, Karen Casillas, Heather Darcy, Dori Drayton, Devyn Duex, Jean Duffy, Catherine Ellis, Abigail Russell, Susan Shoemaker, Peggy Whitmore, and Emily Wrightson. 45

We know that investors are looking for experienced and trusted advisors who can provide wealth management services that are focused on their unique circumstances and tailored to their goals. In more than 30 years of acting as a fiduciary to some of the country’s biggest retirement plans, we have gained valuable insights that we can apply to your wealth planning and investment challenges.

Rob Cook, CPA, CFP® Financial Advisor, Financial Planning Sacramento, CA Sonja Rath Client Management, Wealth Client Services Sacramento, CA Kelly Brothers, CFP®, MBA Principal, Financial Advisor Sacramento, CA

captrust.com • 919.870.6822 | 800.216.0645 • 4208 Six Forks Road, Suite 1700 | Raleigh, NC 27609

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