For Mark Roberts’ Use: As most people plan for retirement, they tend to focus on reaching a specific savings goal. And there’s certainly nothing wrong with that approach. After all, it’s easier to reach a well-defined goal.
On the other hand, there are other ways to look at the retirement income puzzle. Aside from accumulating a particular amount of money in your retirement account, you should also be asking how long you need your retirement income to last. More to the point, how might inflation impact your purchasing power over the years?
Whether you’re twenty-five and just starting your career, or seventy-five and already retired, inflation impacts all of us. Over time, a rise in prices on goods and services will restrict your budget, unless of course your budget can also grow. But inflation can be sneaky, and fly under your radar for a few years at a time. Have you even considered the price of a loaf of bread or a gallon of milk this year, as compared to 2010? Probably not. Most people don’t track prices that closely. But if you think about prices now, compared to the 1990s, you realize that inflation has taken a toll.
In other words, inflation can do its dirty work very slowly, and most of us don’t think about it every day. But considering you will likely enjoy a retirement lasting two decades or more, you will definitely want to plan for rising prices. Even at a very low rate of inflation, prices on most goods and services could almost double over a twenty-year period. We also know that the cost of healthcare is currently rising much more dramatically than the overall inflation rate – and healthcare costs tend to disproportionately affect retirees.
During your working years, you counted on raises every year, or at least every few years. Most of us will only receive a “raise” in retirement if we plan for it! And that’s where we can help. Come meet with us, and we will discuss ways to potentially help your assets to grow, or show you different streams of income that grow to keep pace with inflation. Together we can craft a plan that allows your standard of living to remain stable throughout your retirement.