Retirement Savings Secret Killer: Inflation
Retirement savings secret killer: inflation …How can you avoid it creeping up on you? There has been a lot of discussion recently about rising inflation, but even at low rates, can secretly eat away at your carefully accumulated retirement savings. Roland shares some way to help avoid inflation creeping up on your retirement nest egg.
First, let’s discuss, what inflation is –technically it’s the devaluing of a buying power of a currency. Over time the government pumps more money into the economy which leaves more money to buy relatively the same amount of stuff. So, the good news is while you’re working your wages should go up! But so do prices. Think how cheap a can of pop or a gallon of gas was when you started driving….Now it’s all considerably more expensive. When we’re working, we’re not terribly worried about inflation because we continue to make more money. But! In retirement you stop working. Now you’re living on your carefully accumulated investments and savings with maybe the same amount of expense. But each year inflation climbs higher, which means so do the costs of goods and services. Historically we expect inflation rates to rise about 3% each year but, there’s no guarantee. So if your savings, CD’s and investments are not at least growing above inflation, you’re losing valuable buying power. That’s why it’s very important to keep inflation in mind when creating your overall investment strategy.
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