How Inflation Will Affect Your Retirement


Filed under: Retirement


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Retirement planning often focuses on a specific savings goal, and a target date for the beginning of your new life. But many people fail to think beyond that date. Once you’ve saved a comfortable nest egg, and you are finished with your career, what happens next?

You begin taking distributions from your retirement plan, budgeting carefully, and enjoying your retirement. But wait! Years ago, when you calculated a retirement savings goal, did you consider the impact of inflation? And did you factor inflation into your withdrawal strategy?

Due to longer lifespans, most of us can expect to live twenty years or more after we retire. So while you might not notice a change in prices from one year to the next, consider the fact that over a twenty-year period, changes in the cost of living will most definitely be very noticeable! That means the budget you set today, to begin the first year of your retirement, probably won’t be at all feasible twenty years from now – or even five to ten years from now.

Inflation affects every aspect of your budget, from housing to groceries, to gas and even healthcare. In fact, even with inflation remaining at very low levels over the past few years, the cost of healthcare has increased at a much faster pace. We can’t always count on slow growth in prices; some commodities do experience rapid price hikes (such as we often see with the price of gas).

Luckily, we have ways of factoring inflation into your overall retirement plan. Some investment vehicles, like stocks, variable annuities, and variable universal life insurance policies, can help the growth of your funds keep pace with inflation.

Of course, investment vehicles that carry more potential for growth are usually the ones that also carry more risk. And we never want you to risk more than you can afford to lose! That’s why most people choose to carefully diversify their portfolios, sheltering a portion of principal while also allowing for some growth. That way, you can play it relatively safe while also factoring inflation into your overall retirement plan.

Schedule an appointment with us, and we can help you assess your current retirement plan. Then, together we can make any necessary adjustments, so that hopefully your retirement income will keep pace with the cost of living.



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This information has been provided by a licensed insurance professional and does not necessarily represent the views of the presenting insurance professional. The statements and opinions expressed are those of the author and are subject to change at any time. All information is believed to be from reliable sources; however, presenting the insurance professional makes no representation as to its completeness or accuracy. This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, accounting, legal, tax, trust and estate, or investment advice. Infinite Wealth Advisors is not an investment advisory firm.  Investment Advisory Services provided by NAMCOA® – Naples Asset Management Company®, LLC, a federally registered investment advisor, website: www.NAMCOA.com .