INFLATION CALCULATOR

It’s a good idea to consider inflation costs when planning for retirement. Inflation causes your dollar to be worth less in the future. In other words, it costs more to buy the same items years down the road versus now.

 A basic inflation rate is about 2% annually. Most people agree that between 2%-3% is a fair average rate for inflation. If you want to be more accurate, you can also use an inflation calculator, just one of many available retirement planning tools.

DOING THE MATH

Here’s an example. If you need $40,000 of income each year, and inflation was 2%, then next year you need an extra $800 just to cover the same expenses. In 5 years, that number jumps to $44,000. Then, at 10 years, you’d need almost $50,000 to buy the same stuff you bought 10 years earlier for $10k less. One of the important aspects to retirement planning is to consider how much you’ll need in income now AND in the future. At Synergist Wealth Management, we offer various options, including optional benefits on fixed indexed annuity plans, that may help. Indeed, we aim to help you keep a lifetime of income that provides for you even as inflation impacts your money.

 RETIREMENT PLANNING TOOLS FOR BUDGETING

Another important piece of the retirement income puzzle: expenses. In our work with clients, we review your anticipated expenses, as well as your current cost of living. Some people feel that they will be ok living on less. But, it is important to actual budget and document exactly how much money you’ll need.

There are some online budget calculators that can help you layout your expenses and income needs. Mostly, the aim is to make sure you have enough income to support your lifestyle and living costs in retirement.

Also, make sure you include any “extra’s” such as vacations, dining out, gift or charitable giving, etc. In addition, it is a good idea to pad your income with a surplus that can be used as discretionary income or used to save towards larger purchases.

SAFETY COULD BE YOUR BEST TOOL

It seems that secure retirement income options are becoming less available. Pensions have all but gone away in most organizations. In fact, most government employees need to put more into their pensions now than before. Yet, the payout when they retire seems to hardly be enough. When retirement hits, some people are not satisfied with the amount they receive. CD’s and traditional savings accounts have some protection. But, the FDIC only covers up to $250,000 of your money. In addition, the interest rate you receive may be less than desirable.