Healthcare costs. Basic living expenses. Leisure activities. These are all important factors when determining how much money you’ll need in retirement. However, don’t forget to consider inflation too.
What is inflation?
Inflation is a calculation of average price increases over a
given year, typically shown as a percentage. As inflation
increases, it reduces the purchasing power of a dollar. The
U.S. has seen inflation fluctuate year over year. For example,
in 2008, inflation averaged 3.8%, in 2015, 0.1% and in
2019, 1.8%.
Take a look at how prices may change
over time:
What can you do about inflation?
Inflation is an inevitable reality, but there are things to consider
when planning ahead to help defend against inflation.
1. Are you participating in your company’s retirement plan?
If your company offers a match, are you saving enough to
get the full match?
2. Does your overall portfolio include an investment lineup
designed to hedge against inflation?
3. Think about your vision for retirement and how you want
to spend your time. Are you saving enough to reach
those goals?
4. Use our online “Are My Current Retirement Savings
Sufficient?” calculator on getretirementright.com to help
you determine how much you will need to save. This tool
takes into account inflation when making calculations.
Inflation is a real threat to your retirement, but
saving early and investing wisely can help you
safeguard your savings.