Global View Investment Blog

Worried Inflation Will Wreck Your Retirement? Here's What to Do

Take a deep breath and know that you have a team of advocate advisors right here who can help you stay informed and prepared for volatile economic times. Inflation can be one of the most difficult factors to plan for when you're exploring retiring in Greenville, SC. As inflation increases, so do prices—and that means your savings won't stretch far enough if you continue to spend as much as you have in the past.

It's vital to understand how inflation works and what you can do about it before this becomes a problem for your retirement plans.

Our investment advisors in Greenville, SC, at Global View can remove the worry and stress of inflation wrecking your retirement.

This article will walk you through:

  • How inflation impact retirees' savings accounts and investments
  • How to calculate your retirement budget to cover your costs
  • How to make your money last throughout retirement
  • How to invest in assets such as real estate, gold, and alternative investments 
  • How to prep for the possibility of a longer than expected retirement 
  • How to get professional advice from a financial planner who can help


What is inflation and how does it impact retirees' savings accounts and investments

Defined as the increase in the cost of goods and services over time, inflation is an unavoidable part of life. While it can be measured in a variety of ways, the most common method is to look at how much prices went up from one year to another. This measurement can be done on both a national and individual scale. 

For instance, if you want to know how much inflation has impacted your wallet over the past five years as an average American consumer, then you'd simply add up all your monthly expenditures and compare them with what they would've cost five years ago, adjusting for inflation with each passing year (if prices for certain items have gone down then set their current value equal to zero). If you're curious about how much price increases have affected just one single product—say, a loaf of bread—then simply measure its current price against its price five years ago (again adjusting for inflation).

The other way we measure inflation is by looking at economic growth instead of by calculating changes in actual dollars spent or earned throughout various time periods (though these two methods are often correlated). This type of measurement has its advantages because it's easier than tracking every purchase made by everyone involved in an economy. However, there are drawbacks too: since there's no universal standard used worldwide when calculating GDP figures across multiple nations' economies (which makes comparisons difficult). 


How to calculate your retirement budget and ensure it will be enough to cover your costs

How to calculate your retirement budget and ensure it will be enough to cover your costs

You can get a rough idea of how much income from your retirement savings will be enough by calculating the total amount you need to cover your expenses, then multiplying that sum by the percentage of your income that you'll be withdrawing each year. For example, if you're planning on withdrawing 4% of your savings each year and need $60,000 in annual income from those savings to cover all of your living expenses, then you'll want to withdraw $2,400 per month (4% x $60K).

When calculating a budget for potential retirees—whether you're currently retired or still working—it's important to make sure you have enough money to last throughout your lifetime. To do this effectively, it's important firstly to estimate how much money will be required throughout retirement and secondly how much is available for spending during this time period.


Tips for making your money last throughout retirement, even in times of high inflation

Take these basic tips from our certified financial planners in Greenville, SC, knowing that your investment strategy should work in relation to your financial goals, risk tolerance, and time horizon. This means your strategy will differ from your neighbors or friends. Your financial situation is unique and should be treated as such.

  1. Invest in assets that hold their value when inflation rises. Stocks, bonds, real estate and other hard assets can protect your retirement savings from the effects of rising prices.
  2. Prepare for the possibility of a longer than expected retirement by saving more now while you're still working. If you plan to retire at age 62 and live another 20 years, you'll need roughly eight times as much money in your nest egg than if you were planning for only ten years of expenses. That's because a dollar today will be worth less in the future due to inflation—unless it's protected by investments like stocks or bonds that appreciate with time (as opposed to savings accounts).
  3. Seek professional advice from a financial planner at Global View who can help you create a personalized plan for dealing with inflation during retirement.
  4. Read: Road to Retirement: How to Protect Your Retirement Savings as Inflation Soars


Investing in assets that are known to hold their value during periods of rising prices

If you're worried about inflation, there are many ways to protect your assets. Some people invest in assets such as agricultural products, real estate, fine art, or precious metals like gold and silver, which have outperformed stocks over the last decade. Others turn to the stock market, where companies can issue new shares when needed.

Investors often look for assets with low correlation—a statistical measure of how well two things move together—with stocks and bonds. Of course, as a retiree, you must make all investment decisions based on your risk tolerance. 


Preparing for the possibility of a longer than expected retirement by saving more now while you're still working

  • If you think it's possible that your retirement may last longer than expected, one strategy is to save more money while working (if that applies).
  • Another option is cutting back on expenses now and saving the difference.
  • You could also work longer than expected—though this may not be an option if you have health problems or other limitations.


Seek professional advice from a financial planner to deal with inflation during retirement

As the cost of living increases, it's essential that you seek professional advice from a financial planner who can help you create a personalized plan for dealing with inflation during retirement. A good financial planner will be able to answer questions like:

  • What investments should I consider?
  • How much money do I need to save each month in order to reach my goals?
  • Should I invest in stocks or bonds?
  • How do I allocate my portfolio between stocks and bonds?

Many people don't realize how important it is to have someone look over their finances on an ongoing basis—especially when it comes time for them to retire. A financial advocate advisor at Global View will work with you as your life changes, helping ensure that your portfolio stays aligned with your current needs and goals.


The Takeaway

If you’re worried about inflation, don't panic.If you’re worried about inflation, don't panic. Instead of worrying about what might happen in the future, focus on what you can do today to prepare for it. You may have some options for increasing the amount of income your retirement plan generates or reducing your expenses so that you have more money available each month. 

It's also important to keep an eye on how inflation affects other aspects of daily life—such as food and housing costs—so that these expenses don't get out of control while you're working toward a comfortable retirement lifestyle! Contact us today to talk through this at no additional cost. We look forward to answering your questions and easing your mind.


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Erin Milner

Written by Erin Milner

Erin works as a paraplanner alongside our Advisors in managing client relationships and special financial planning needs, including retirement transition, education, and estate planning. Erin began working in the financial advisory business upon graduating from the University of Georgia with a BS in Financial Planning in 2015. She competed in the National Financial Planning Student Challenge in 2014. Erin is a member of the Financial Planning Association. She volunteers at Habitat for Humanity as a Financial Assessor.

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