One of the greatest impacts inflation has had on the world is the security that your retirement funds are sufficient for your lifetime. Most people who have been saving for their retirement for a period of time have approximately $1 million in bonds as they are considered the more secure investment opportunity when compared to the stock market.
Unfortunately with inflation even the most common withdrawal of 4% per year is not enough to sustain a luxurious lifestyle. The article on The New York Times goes into detail of why a $1 million investment is not enough and takes a look at the realistic figures of most American citizens. The most important points to remember is the following:
- The earlier you start putting money towards your retirement, the better.
- You need to invest in bonds AND the stock market so that you have more than one source of annual returns to rely on.
- As a retired person you need to live a slightly less luxurious lifestyle, cutting down on expenditure so that your savings lasts longer.
- If you are physically able to work till you are 70 years of age it is better that you do so, giving yourself an additional 5 years of savings towards your retirement as well as 5 years less where you will be taking money out of your investments.
A popular quote “Getting old is not for the faint of heart” is truly applicable here as it does take courage and determination to alter your lifestyle to accommodate your financial situation, but it is not the end of the world at all, with some practical changes you can have a good life after retirement!