If you’re like most of our clients, you have already made some responsible decisions and are well on your way to a comfortable retirement. You evaluated your expected lifestyle in retirement, attached a price sticker to it, and you feel confident that you will generate enough income to live securely for the rest of your life.
But have you considered the impact of inflation? More specifically, have you considered how long inflation will impact you? We all know that inflation will cause a slight rise in the prices of everything from gas to groceries to healthcare each year, and most of us know that our budgets will expand to accommodate inflation. But with life spans increasing dramatically for the current generation of retirees, most of us haven’t considered how rising prices will multiply over the years.
For example, our inflation rate is currently low, at about 3 percent annually. That doesn’t sound like a big deal. But assuming that rate stays the same, it means prices will double in about twenty years. And that’s a big assumption; inflation could certainly increase at some point. Right now, the rate is considered low, but it won’t always be that way.
So, when you calculated your lifestyle and cost of living in retirement, did you consider the fact that nearly everything will someday cost double what it does now? Your parents and grandparents probably didn’t worry quite as much about inflation, because most people in previous generations lived about ten years after retiring from their careers. Today, retirees are living twenty or thirty years, and sometimes longer than that.
If your retirement turns out to be a long one, how will your retirement income plan keep pace with inflation? Will you be able to enjoy your same standard of living in fifteen or twenty years? Or do you need to make adjustments, to ensure your continued comfort?
These are important questions to ask yourself, and we can help. Call us for an appointment, and we’ll discuss methods of helping your retirement income keep pace with the rising cost of living.