TRANSCRIPT:Â
We all understand and feel the effects of inflation, especially of late. But just a few decades ago, inflation wasn’t a real retirement problem when retirement was expected to be short just a few years and the corrosive effects of inflation didn’t have the time they needed to make the issue relevant. This has changed dramatically now that people are routinely having 30 plus year retirements. Just think back to what you paid for a car 30 years ago or what you made and lived on back then. It’s shocking to think about and that is what’s happening over the course of a modern retirement nowadays.
30 years ago, the main issue or dragon if you will that most retirees were concerned with fighting in retirement and many still are was principal protection. One needed to preserve their hard-earned money in retirement and fix their income based on their principle. This is where the term fixed income actually comes from.
One of the retirement problems today is that a whole generation of retirees who have been taught to worry about and fight the principal protection dragon are in the wrong fight. The issue is no longer about protecting your principal, not losing what you’ve saved. It’s about protecting your purchasing power. This is the dragon that modern retirees need to fear.
You see, if a retiree today fixes their income and thus their principal, while the rising cost of living slowly eats away at their purchasing power, they will eventually find out, usually after it’s too late, that they have been eaten by a dragon they didn’t even realize they were fighting.
Today’s retirees should be more concerned about having investments that don’t fix their income or principle, but rather provide an income that will rise, at least at the rate of goods and services they need over time.
There are many types of investments and planning strategies today that can help create a rising and predictable income over a 20 to 30year retirement. If you’d like to have a discussion about creating such an income for your retirement with an adviser who cares, give me a call.
