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.
This article will walk you through:
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).
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.
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.
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.
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:
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.
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.