By June 14, 2017 Read More →

Inflation and Your Retirement Savings

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When you think about investing for retirement, you’d probably consider a number of factors like market volatility, risks, liquidity and fees. But many investors tend to forget a key factor when saving money for retirement — the risk of inflation.

Inflation affects all of us but has a greater impact once you are no longer working full-time and can’t adjust your savings to accommodate the rising costs.

Inflation reduces your purchasing power. When the cost of goods and services rises faster than what you have in your investment account, the money you have will buy fewer goods and services over time. The need for these goods and services doesn’t necessarily go away. Therefore, you need to be sure you have sufficient retirement income to meet your required expenses.

Inflation consumes your savings faster. When determining your annual retirement budget, you need to add a cost-of-living adjustment to ensure you have money to buy the same amount of goods and services you require.

 

See Also: Inflation and Your Retirement Income

 

Use this calculator to see the effect of inflation on the real value of your retirement savings.

 

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