If you want to see the difference [in inflation], just remember back to how much it cost to buy a cup of coffee, or fill up your gas tank 30 years ago. It’s pretty significant.
New York, NY (PRWEB) June 05, 2013
GreyWingFinancial.com personal finance and economic magazine today issued their observations on inflation, and cautioned consumers who are planning for retirement to include inflation when calculating how much they’ll need to have saved to retire comfortably.
According to an article by Scott Holsopple, published in the USNews “Money” Section on June 4th, 2013, inflation affects three big areas that retirees need to consider: medical services, food costs, and the price of fuel. Holsopple states that not only does inflation deplete budgets, causing retirees to spend more on regular services and items than they’d planned on, but it can also erode savings—eating away at a nest egg from the other end as well. The reason is that the interest rate on a savings account likely does not keep pace with the rate of inflation, as opposed to working consumers whose employers may offer raises to keep up with the higher cost of living.
Revisions in financial plans due to inflation may need to be enacted by children of seniors. GreyWingFinancial.com cautions the younger generations, “if you're helping your elder parents with their finances, you need to be sensitive to how they feel about having their kids advise them on money.” On the website of Globe Life Insurance Company, Stacy Williams said on this subject, “You might have to respect their desire for privacy to begin with, but if they are obviously struggling, you’ll have to be a little more persistent.”
GreyWingFinancial.com strongly urged soon-to-be retirees, children of soon-to-be retirees, and even current retirees to re-evaluate their savings and retirement plans, factoring in inflation. Auto insurance may cost more for seniors than they expect. This can be a sensitive subject as we age. GreyWingFinancial.com suggests that if auto insurance is in the picture, children of elderly parents may want to show them the article on DMV.org where the site lists seniors as the second most likely group to be involved in an auto accident, after teenagers. GreyWingFinancial.com is quoted as saying, “Inflation is something that I see all too frequently being left out of the equation when calculating how much money is needed in retirement. People are usually pretty good about estimating medical costs, travel costs, and increased savings if they’re planning on making a big purchase like a motor home or a boat. But if you are planning on retiring at, say, 68 years old, think about how much the inflation will increase over the next 30 years of your retirement. If you want to see the difference, just remember back to how much it cost to buy a cup of coffee, or fill up your gas tank 30 years ago. It’s pretty significant.”
The above-mentioned USNews article reports that two ways to work inflation into a retirement savings plan is first off to actually calculate what the yearly inflation rate will be. Holsopple recommends consulting a financial advisor, or even using a simple online calculator to figure this one out. He also advises to continue investing throughout retirement, since mixed investments will most likely keep up with inflation.
GreyWingFinancial.com is quoted as saying, “It is generally a good idea to phase down to a more conservative portfolio in retirement, but that doesn’t mean to stop investing altogether. People who think that they can get by on just bonds and savings accounts alone might be right, if they’ve done their homework accurately, but I personally wouldn’t want to risk it. I’d want to have my hands in other investments that will grow with the rate of inflation. It’s a personal choice, but whatever you decide on, it’s absolutely vital to make inflation a part of your retirement equation.”
GreyWingFinancial.com is an online economic and finance magazine that is dedicated to providing seniors, retirees, and soon-to-be retirees with up to date and relevant data to aid them in their retirement choices. GreyWingFinancial.com commonly features articles about investing, saving for retirement, and other pertinent financial topics that seniors will confront in their golden years.