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Is Inflation a Threat to Your Retirement?

Is Inflation a Threat to Your Retirement?

In the last several months, you may have noticed that prices seem to be creeping up. Maybe your grocery bills are higher than they were a few months ago, your gas bills may be near-double what they used to be, and just about everything else may seem a bit more expensive than it was this time a few years ago (sometimes more than a bit). You’re not alone in this. Inflation is currently at a 40-year high, [1]meaning prices are rising and our dollars aren’t stretching as far as they used to. Recent polls show that 52% of Americans view inflation as the nation’s leading cause for concern, [2] so with the unique risks presented by inflation, it is important to know how best to respond.

Market Volatility and Inflation: A Double Threat

Recent market volatility has led to asset classes and sectors with more risk attached seeing major swings in value. The NASDAQ Composite Index, alone, recorded a 27% drop in its overall value from January 3rd to May 18th of this year.

You’ve worked hard to maintain your retirement goals, so between inflation and ongoing market volatility, you may be considering a more conservative approach to your investment strategy. Periods of high inflation mixed with market volatility can pose their own problems, so for guidance in navigating this double threat, it’s best to speak with a financial advisor who is actively monitoring current economic circumstances.

Inflation’s Impact

In times of economic uncertainty, it is easy to make the mistake of moving forward too conservatively with your investments. Inflation means a rise in your cost of living, so if the rate of return on your investments don’t measure up to the levels of inflation in the future, you could be left with an incredibly safe investment that doesn’t provide adequate income amidst a rising cost of living. Income from investment types such as 5-year Certificate Deposits (CD) and pensions are at risk of this, potentially leaving retirees with income payments that cannot keep up with inflation.

If the expectation is to cover your living expenses with a fixed amount of income, that income will cover less expenses as inflation rises.

What Now?

There is no one-size-fits-all approach to combatting inflation during your retirement years, but many strategies do exist to help you respond and protect your investments for the years to come. To schedule a complimentary financial review with Moore’s Wealth Management and see what your options for navigating ongoing market volatility and inflation may be, click here or call our office at 770-535-5000, where a staff-member is awaiting your call Monday through Friday, 9AM to 5PM.

This material is provided as a courtesy and for educational purposes only.  Please consult your investment professional, legal or tax advisor for specific information pertaining to your situation.

Advisory Services Network, LLC does not provide tax advice.  The tax information contained herein is general and is not exhaustive by nature.  Federal and state laws are complex and constantly changing.  You should always consult your own legal or tax professional for information concerning your individual situation.

All brokered CDs may fluctuate in value between purchase date and maturity date. CDs may be sold on the secondary market, which may be limited, prior to maturity subject to market conditions. Any CD sold prior to maturity may be subject to a substantial gain or loss. Vanguard Brokerage does not make a market in brokered CDs. The original face amount of the purchase is not guaranteed if the position is sold prior to maturity. CDs are subject to availability. As of July 21, 2010, all CDs are federally insured up to $250,000 per depositor, per bank.

Nasdaq is a global electronic marketplace for buying and selling securities. Originally an acronym for “National Association of Securities Dealers Automated Quotations”—it was a subsidiary of the National Association of Securities Dealers (NASD), now known as the Financial Industry Regulatory Authority (FINRA). Indexes are unmanaged and do not incur management fees, costs or expenses.  It is not possible to invest directly in an index.

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