Inflation has always been a concern for soon-to-be retirees. But now with inflation the highest its been in nearly 40 years, it is even more of a concern. How can retirees avert this purchasing-power nemesis?
Inflation has always been a concern for soon-to-be retirees. In fact, approximately 71% of those nearing retirement are worried inflation will impact their retirement savings.¹ A well-known indicator of inflation is the consumer price index (CPI), and it reports a 5.4% rise, which is the highest inflation in almost 13 years. How does this rise in inflation impact retirees or those nearing retirement?
Most retirees’ income sources are fixed, while the cost of goods continues to increase. Given that their income is fixed, when inflation hits, their purchasing power is reduced. Goods and services that were affordable a few years ago are now a concern. An enjoyable retirement may become an anxious one as retirees determine how to reassemble their income distribution strategies to keep pace with inflation. Here are a few considerations that may help clients control their purchasing power:
It is important to account for inflation risk when planning for retirement in order to manage the anxiety that may come from depleting savings. The “golden years” for retirees should be just that. It should be a time to enjoy life, family, and friends as a result of their hard work and dedication during their working years.
Share these considerations with your clients to help them manage the loss of purchasing power that they are experiencing due to inflation.
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