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  • Writer's pictureSamantha Diggs

Retirement Financial Planning Against Inflation

Before 2020, retirement financial planning could be hopefully anticipated towards a restful, secure future; nowadays, those plans have upturned, making retirement seem like an impossible dream. Under the strain of rising inflation rates and an impending economic dry spell, securing your finances is more strenuous than ever.

Securing finances from day-to-day is difficult enough without prospecting against rising inflation rates and recession. As of May 2022, inflation rates have risen to 8.6% with a predicted growth of 2.80% within the next 5 years, making it increasingly difficult to afford essentials like food or medicine. Couple that with the steep decline of thriving businesses due to shut-downs and the odds of preserving enough money for a long retirement appear bleak. Yet, this does not bar saving for retirement completely, as there are several steps you can take to secure a comfortable retiree lifestyle. Here are some guidelines to keep in mind when planning financially for retirement in 2022 and beyond.

Review Your Budget & Expenses

Rather than impeding your plans, financial advisors see times of inflation or recession as a good time to reassess budget limits and essential expenses. It’s an opportunity to ask, “what essentials do I need?” or “where can I cut back on expenses?” In fact, such moments could provide a time to experiment with living on a fixed income, providing the chance to simulate retirement. It also can prompt you to assess your current savings habits. By reorganizing your budget and cutting back where possible, you can keep your retirement financial plans on track, protecting your finances until they recover from rate changes in the future.

Reassess Social Security Benefits

When jobs become scarce during economic recession, retirees may need to rely upon social security benefits for supplemental income. However, retirement planning requires a strategic delay so as to distribute those social security funds throughout retirement. Retirees can begin collecting benefits at 30% or lower around age 62, yet most don’t draw upon those benefits until 67 or later to build up those savings to maximum profit. In short, retirees may need to debate delaying retirement to ensure their full social security income lasts throughout retirement.

Diversify Investments

Despite 2022’s economic instability, most retirees have still retained personal or company stock shares to build their savings. However, certain stocks may fluctuate and may end up reducing income they were counting on. Retirement financial planning therefore demands investment diversity into assured accounts that can manage inflated prices. Discuss with your financial advisor what investments are available and what would work best for you and your individual situation. You may also consider investing in a Roth retirement plan to build your savings and avoid future taxes, allowing all income growth to be tax free. Retirees can gain better income benefits through a proper financial investment strategy, discuss these options with your personal financial advisor who can help you navigate through these items and determine what is best for your individual situation.

Have A Plan

The financial instability of the 2020’s has left planners struggling to take steps towards securing a set retirement income. However, following these steps can help you better strategize your retirement financial plan. Taking action to secure your future with an actionable financial plan can help you stay hopefully and keep focused. If you are a business owner and need information on the right retirement plan for your business, contact RPCSI for personalized guidance.

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