Inflation: The Termite That Keeps Eating Away at Your Savings

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About Derrick Loflin

Derrick Loflin specializes in helping individuals and families prepare financially for retirement with the proper Safe Income Planning Strategies, educating clients on options to generate more retirement income and how to not only securely protect their money but also provide strategies to grow their money during uncertain economic environments. Derrick’s career in the Financial and Insurance Industry started a few years before the 2008 economic crash. He has more than 15 years of experience helping people protect and grow their money. Derrick has assisted hundreds of individuals and couples over his career by creating a solid financial foundation, as well as generating a secure retirement income that they cannot outlive.

When it comes to money, inflation is like a termite: It’s small and seemingly innocuous initially, but it can do severe damage over time.

Inflation is the gradual increase in the prices of goods and services. It is measured as the rate at which the cost-of-living rises. And while a bit of inflation is good for the economy (it encourages spending and investment), too much may be detrimental.

Inflation is often thought of as affecting prices in the short term, but it can also significantly impact long-term financial plans like retirement. For example, let’s say you have $100,000 saved for retirement and expect to retire in 20 years. Assuming an inflation rate of 3%, your $100,000 will be worth just over $74,000 in today’s dollars by the time you retire. In other words, the purchasing power of your retirement savings will be eroded by inflation unless you take steps to protect it.

Solutions?

To combat the effects of inflation, you need to invest in assets that may keep up with or exceed the inflation rate. Otherwise, your retirement savings could dwindle over time.

It is difficult to know what category of investments to select. Many people have chosen major Indices such as the S&P 500 Stock Index, but like all choices, there may exposure to risk. You can also ladder your investments, which means investing in a mix of short-, medium-, and long-term assets. This strategy may help smooth out the effects of inflation over time.

But, these kinds of investments are still considered high-risk, and there is no guarantee that they will outperform inflation rates. So, before investing your hard-earned money, you need to be comfortable with the risks.

Safer solutions?

If you’re uncomfortable taking on too much market risk, you can still help offset the effects of inflation by investing in annuities and other insurance products.

An annuity is an insurance product that may provide guaranteed income for life. When you purchase an annuity, you’re essentially pre-paying for your future income. When set up correctly, this income may be protected from the effects of inflation.

While there’s no way to eliminate inflation’s effects completely, you may help protect yourself from the long-term damage it can cause by staying informed and using a combination of safe money strategies.

If you’re worried about how inflation might affect your retirement savings, contact an insurance professional today to learn how these products may help.

About Derrick Loflin

Derrick Loflin specializes in helping individuals and families prepare financially for retirement with the proper Safe Income Planning Strategies, educating clients on options to generate more retirement income and how to not only securely protect their money but also provide strategies to grow their money during uncertain economic environments. Derrick’s career in the Financial and Insurance Industry started a few years before the 2008 economic crash. He has more than 15 years of experience helping people protect and grow their money. Derrick has assisted hundreds of individuals and couples over his career by creating a solid financial foundation, as well as generating a secure retirement income that they cannot outlive.

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Annuities are a safe and reliable investment. They can transform your savings into a more predictable income. Speak with one of our qualified financial professionals today to find out how an annuity can offer you guaranteed monthly income for life.

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Content in our posted articles is deemed to be accurate but topics, facts and laws can change. It is always a good idea to verify facts before making decisions. Always seek authorized and professional advice regarding financial decisions which includes investing, annuity purchases, tax planning, changes in a financial portfolio and retirement planning.

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