Little Rock, Arkansas (PRWEB) July 25, 2013
Many people carefully plan out their retirements, saving money from a young age and contributing to retirement accounts, but more often than not, most people fail to consider the cost of inflation when planning for retirement. Eric Hutchinson, President of Arkansas-based Hutchinson Financial, Inc., said inflation should never be neglected.
In “The Hidden Dangers of Inflation: How it Can Affect Your Retirement,” a video featured in Hutchinson Financial’s online video series, Hutchinson explains the importance of factoring inflation into the equation.
“One of the things you should consider in your retirement planning is the level of income you will need to support the retirement lifestyle of your dreams,” Hutchinson said in the educational video. “Don’t forget to factor in how increasing inflation can gradually erode the purchasing power of your dollars.”
Many financial experts suggest that most people will be comfortable maintaining their pre-retirement lifestyle on about 70 to 80 percent of their pre-retirement income, which can be a starting point for their retirement planning.
In the Financial Briefing series video, Hutchinson shares and example of a person who decides they need $50,000 per year of gross income to live comfortably after retirement.
Imagine a projected inflation rate of three percent, and suddenly the amount of gross income needed to live comfortably increases dramatically. In this example, someone who thinks they need $50,000 gross income per year would use the projected three percent inflation rate to discover that ten years into retirement they will actually need more than $67,000.
In the same scenario outlined in the online video, that person would need more than $90,000 per year 20 years into retirement, and more than $121,000 per year 30 years into retirement.
“If you’re still several years away from retirement, you still need to calculate the impact of inflation over time as you project how much you will need at retirement. If retirement is ten or 20 years away, you’ll very likely need more dollars of income than you do today to live the same lifestyle,” Hutchinson notes in the video. “As long as there is inflation, keeping an eye on the purchasing power of your dollars will be critical to your long term financial success.”
To watch “The Hidden Dangers of Inflation: How it Can Affect Your Retirement,” visit hutchinsonfinancialinc.com.
About Hutchinson Financial
Hutchinson Financial, founded in 1988, is an Independent Registered Investment Advisory firm based in Little Rock, Arkansas. Hutchinson Financial, Inc. is a fee-only financial planning firm committed to helping all clients reach their individual financial goals. All Hutchinson team members who provide financial planning services and investment advice to clients have professional credentials such as Certified Financial Planner, Chartered Retirement Planning Counselor, Chartered Financial Consultant, Chartered Life Underwriter, or Accredited Investment Fiduciary. To learn more about Hutchinson Financial, Inc., please visit http://www.hutchinsonfinancialinc.com/.