With the market booming…then dropping mid-April 2013…there has been plenty to talk about regarding how best to take advantage of market highs while protecting against market lows. However, with so many fixated on market performance, fears about inflation have seemingly dropped off the “let’s all worry about this” radar. Unlike most things market-related right now, inflation seems somewhat under control. According to Reuters, Jeffrey Lacker, president of the Federal Reserve Bank of Richmond, recently said that U.S. inflation rates are expected to remain steady, despite massive Fed policy easing.
“I have been impressed by the stability of inflation expectations. People are pretty confident we’re not going to let it get away from 2 percent. I like that,” Lacker told CNBC television in an interview. “I think we’re in a good place now, but I think we shouldn’t be complacent.”
I wholeheartedly agree with Mr. Lacker about guarding against complacency––especially when it comes to inflation and retirement income planning. Inflation impacts your purchasing power thus, regardless of whether you’re retiring tomorrow or ten years from now, any inflation takes a toll on your retirement nest egg.
Remember living through the inflation nightmare in the 1970’s? From 1973-1982, inflation averaged a whopping 8.7% per year, with the calculated cost of living climbing 130%. During this time, a $2,000/month fixed income fell to $840 in purchasing power in just ten years. Ouch.
While a stable 2% inflation rate might be “impressive” to The Fed, it’s not that great for retirees who depend on fixed income. A $2,000/month fixed income today would fall to $1,600 in purchasing power in ten years. After 30 years in retirement, which is a pretty realistic retirement time span today, this monthly fixed income payment would drop to $800 in purchasing power. Again, ouch.
So, how can you safeguard ongoing retirement income against ongoing inflation?
This is a question I take seriously. While most people look at an annuity to provide income payments for life, a lot of annuities just don’t provide adequate protection against inflation. That’s what makes the Annuity Watch USA approach so different. We focus on both income and growth.
Annuity Watch USA’s new Inflation-Protected Income Analysis provides a customized roadmap for how you can enjoy growth and principal protection in addition to an income stream you can’t outlive. Your analysis will show you how inflation-protected Growth and Income annuities can help continually grow your nest egg––while you’re taking income––to outpace inflation and even provide a “raise” during your retirement years.
Or, you may consider a simple inflation-indexed annuity. An inflation-indexed annuity is a single premium annuity that provides income to the annuity owner for life. It is designed to adjust your monthly payment upward based on the annual inflation rate.
Your complimentary Inflation-Protected Income Analysis, which is based on your personal financial situation and retirement income goals, will help determine if either of these annuity options is right for you.
Just FYI, the inflation rate in the United States was 1.5% in March 2013. To get a better understanding of how inflation can drain the power of your retirement savings, I encourage you to play around with an inflation calculator. You’ll quickly see that inflation––no matter how small––relentlessly gnaws into the value of each dollar in your retirement portfolio as the years pass. The effect of inflation often forces many people into risky investments that may gain value faster––or into low-risk, low-reward investments that at least hold their own.
You don’t have to settle for either high risk or low-reward. Be sure to order your Inflation-Protected Income Analysis today for an inside look at innovative, inflation-busting income strategies designed to boost your income during your retirement years.