Mistake 3: Ignoring the Impact of Inflation
The 2018 inflation rate is 2.38 percent, and it’s projected to range from 2.18 percent to 2.64 percent over the next few years, according to Statista. Although the inflation rate might seem minimal, it still affects how far your dollar will go.
This is especially true for money held in fixed savings accounts, which unlike money in certain investments, will lose value over time.
Why This Is a Mistake
At a somewhat normal rate of 3 percent inflation, your purchasing power will be cut in half in 24 years. Given the previous statistics, and the fact that we are living longer, inflation is every retiree’s worst enemy.
What can you do to mitigate the impact of inflation on your retirement finances?
– Invest aggressively enough to stay ahead of inflation.
– Plan conservatively for inflation while anticipating higher healthcare costs.
– Be prepared to adjust spending and retirement account withdrawals.
