The number one mistake I see people make when planning for retirement is that they do not factor inflation into their future income plan. And when I say income planning, I mean a plan to ensure you will not run out of money in retirement. Just like with taxes, inflation doesn’t magically disappear when you retire. It’s vital that your financial strategy factors in rising inflation.
You can’t make important decisions about how to use your income if you don’t know how much you need to get by. Each of us have a unique number that it costs to just BE us, month in and month out. As people look to how much they will need to save for the future, they use their current expenses and do not take into account that their income will need to increase yearly going forward.
Don’t Let Inflation Derail Your Retirement Plans
According to SmartAsset, since 2000 the average inflation rate is 2.1 percent per year. So, if you retire today and need an annual income of $75,000, then you will need to have an annual income stream of $114,000 20 years from now to have the same spending power. Cost of groceries, gas, medical expenses will continue to go up and you’ll need to prepare for that with a solid income plan. I think this might be a good time to remind you to work with a financial services professional who you trust and enjoy partnering with. When it comes to devising comprehensive strategies, especially income planning, a seasoned financial services pro can really be an invaluable resource.
Safe Harbor Can Help Plan for the Future
Safe Harbor specializes in retirement planning, and we can help you create a long-term income plan that takes inflation and other things you might not consider as you plan for your financial future. If you have any questions or want to learn how our active management strategy could benefit you, call us at (614)760-0670 to set-up a complimentary meeting with me.