The Silent Retirement Killer
The importance of considering inflation in your retirement planning.
In post-World War I Germany, hyperinflation was a serious issue.
The mark-dollar exchange rate rose from 4.2 marks to one dollar in 1914 to a peak of around 4.2 trillion marks to one dollar by November 1923.
At the height of Germany’s inflation, the mark was so worthless that you had to bring a wheelbarrow full to the store just to buy a loaf of bread. Prices rose so rapidly that waiters had to climb on tables to call out new menu prices in restaurants every half hour. Children were even given marks to paint on because they were cheaper than toys.
Our country has never experienced such extreme inflation aside from the hyperinflation of the confederate dollar near the end of the Civil War, but we’ve all seen the effects of inflation during our lifetimes. Remember hearing about the era when grandma paid 20 cents to see a movie? Think back to your own childhood. How much did an afternoon at the movies or a cheeseburger cost when you were 10? A lot less than it does now! That’s inflation.
Inflation can be the silent and slow killer of individual’s retirement plans. Little by little inflation can erode your hard earned savings- does your financial plan account for it?
No one can afford to have their money rot away in the bank. Consider the alternative “safe money” places to put your money that will keep up with inflation. In fact if you wish, there are ways to build in step ups in income in order to keep up with inflation throughout your retirement years.
Decide if you want your income to increase as time goes on so you’ll maintain the same purchasing power 15 years into your retirement that you did in years one through five.
While inflation can be a serious factor in your retirement planning, it’s important to not let the fear of inflation keep you overexposed as you approach retirement. This could be an equally or even more significantly dangerous plan.
In an effort to maintain your current lifestyle, inflation cannot be overlooked.