Inflation is the increase in prices of goods and services. Annual inflation is usually modest. In fact, it hasn’t exceeded 5% since the 1980s.2
Even modest inflation can impact your strategy over the long-term, though. Consider an average 3% inflation rate. Over 24 years, that means a doubling in prices. Could you afford to see your expenses double throughout retirement?
A strategy that leaves room for growth potential can help offset the effects of inflation. As your assets grow, you may be able to take increased income to cover the increase in prices.
Many retirees opt for strategies that have little risk exposure. However, it may be wise to allocate some portion of your savings to assets that offer growth potential so you can keep up with inflation. A financial professional can help you find the right mix.
Do you remember the story of Goldilocks, the girl who finds her way into the home of a family of bears? She tries their porridge, their chairs, and even their beds until she finds the one that is just right.
A “Goldilocks” approach to growing your savings may not be a bad idea, especially after retirement. Don’t look for the portfolio that offers the most return or the least risk. Rather, look for the mix that is “just right” for your needs and goals. For instance, it may be that your “just right” strategy is one that limits risk but also offers growth potential and consistent income. A financial professional can help you find your “just right” strategy.
If you’re like many retirees, you’ll receive Social Security and possibly even a defined benefit pension in retirement. But you also may need to take withdrawals from your savings to supplement those income sources.
What’s the right amount of income to take? If you take too little, you may not live the type of lifestyle you desire. Take too much and you could drain your savings. Before you enter retirement, you may want to plan your income strategy. Determine the right level to take without draining your savings.
Also develop backup plans. For example, how will you adjust your income if your investments decline? What if you have a costly emergency? How will you cover that expense? Should you look at tools to guarantee* your income? Again, a financial professional can help you answer these questions.
Ready to develop your post-retirement strategy? Let’s talk about it. Contact us today at InvestWell, LLC. We can help you analyze your needs and develop a plan. Let’s connect soon and start the conversation.
1https://www.fidelity.com/viewpoints/retirement/longevity
2https://inflationdata.com/Inflation/Inflation_Rate/HistoricalInflation.aspx
*Guarantees, including optional benefits, are backed by the claims-paying ability of the issuer, and may contain limitations, including surrender charges, which may affect policy values. 20113 - 2020/5/26 Investment advisory services offered through Horter Investment Management, LLC, a SEC-Registered Investment Advisor. Horter Investment Management does not provide legal or tax advice. Investment Advisor Representatives of Horter Investment Management may only conduct business with residents of the states and jurisdictions in which they are properly registered or exempt from registration requirements. Insurance and annuity products are sold separately through InvestWell LLC. Securities transactions for Horter Investment Management clients are placed through E*TRADE Advisor Services, TD Ameritrade and Nationwide Advisory Solution
Mobile: 631.742.3340
Fax: 631.982.5511
Mobile: 631.742.3340
Fax: 631.982.5511
Investment advisory services offered through Horter Investment Management, LLC, a SEC-Registered Investment Advisor. Horter Investment Management does not provide legal or tax advice. Investment Advisor Representatives of Horter Investment Management may only conduct business with residents of the states and jurisdictions in which they are properly registered or exempt from registration requirements. Insurance and annuity products are sold separately through Susan Waters, InvestWell. Securities transactions for Horter Investment Management clients are placed through AXOS Advisor Services, TD Ameritrade and Nationwide Advisory Solutions.
Susan Marie Waters: CRD #1591121. CT Ins. License # 2335465 . Insurance and annuity products are not sold through Horter Investment Management, LLC (“Horter”). Horter does not endorse any annuity or insurance products nor does it guarantee their performance. Owners of these products are subject to the terms and conditions of the policies and contracts of the issuing companies. All product guarantees depend on the insurance company’s financial strength and claims-paying ability.