It is essential to understand and pay close attention to inflation and your retirement. Inflation impacts many aspects of one’s financial well-being. Inflation influences the cost of almost everything in society —the price of consumer goods, services, and the cost of living. The inflation rate is also used to determine contribution limits for certain services such as social security benefits.

Retirees need to keep in mind how the rise in inflation affects them. Inflation influences how much retirement benefits will be worth at retirement age and could affect retirement plans by altering purchasing power. Why is this so? Seniors may have to spend more than the younger generation. This is especially true with services such as health care. According to multiple studies, retirees spend three times more money than non-retired adults.

Although seniors have no power to control inflation, it does not mean they should sit back and panic as inflation rises. They need to come up with ways to help prepare for inflation’s effects on their retirement benefits.

One way of doing so is by cutting down on expenses such as housing costs. Take this hypothetical of Susan for example. This 66-year-old woman was pushed into retirement after being let go from the trucking company she worked for. She had been working on her retirement plans, but due to lost wages and the rising inflation rate, she feared her retirement savings was not enough to see her through her retirement years. Susan decided to sell her house in New Jersey and move to a mobile home park in Delaware to reduce her housing costs. This change will help Susan’s retirement savings last longer, hopefully throughout her life. However, even with a tight $40,000 annual budget, she is still anxious that the cost of living might see her outlive her savings.

Professionals in the financial service industries have been advocating for better retirement planning. Working adults are encouraged to up their game and invest as early as possible to take advantage of years of growth potential.

If you are at or nearing retirement and concerned about how your retirement savings will stand up to inflation, contact our team at Quantum Strategies Wealth Advisory. We would be happy to review your retirement plan with you.

Advisory services are offered through Quantum Strategies, LLC dba Quantum Strategies, a Registered Investment Advisor in the State of Pennsylvania. Insurance products and services are offered through William Rizzo, Sole Proprietor.