During the past year or two, inflation rates have reached unprecedented levels. The latest report indicates inflation levels are at 7.9%, which is the highest rate in decades. Individuals are feeling its impact in all regards, from grocery bills to utility bills. The government is currently looking into taking action to combat the inflation rate, which can take years, but what does that mean for your retirement?
You have worked and saved for decades, invested wising, and lived frugally. Despite the record-high levels of inflation rate, are you still able to retire with what you have saved? The answer is yes. While the impact of inflation can be felt when spending, it will have a moderately low impact on retiree’s entire portfolios, especially as the current stock market is at record levels despite comprising relatively small portions of a retiree’s portfolio.
As with all near matured and matured investment portfolios, there are typically dividend-yielding stocks. With the earned dividend income, should you reinvest the earnings or should you spend? The answer would largely depend on the individual’s lifestyle and investment objectives, especially if they are looking to retire within the next couple of years. It would be best to consult with your financial advisor.
With increasing costs of living, how can you keep up with rising prices? Many social programs in the United States have a cost of living adjustments that are designed for situations just like this. It ensures retirees are able to keep their costs of living relatively the same in relation to inflation.
In the meantime, what can you do? It would wise monitor the overall economy and the inflation rate, staying up to date on the markets. Although the inflation rate has reached record levels, changes in an individual’s lifestyle will not change drastically, but it is important to note individuals will need to keep track of all the spending and investments a little closer.