Inflation could crack your nest egg
From: cnbc.com
Remember inflation?
It’s been a while since it was a big part of American life. Inflation has been so low that Social Security payments were not increased for 2016, and the Federal Reserve has even raised the possibility of negative interest rates.
Yet inflation has not disappeared, and for retirees, even low inflation can have an outsized effect on their finances, according to recent research by the Limra Secure Retirement Institute. At the Federal Reserve’s target rate of 2 percent, inflation could erode more than $73,000 of a retiree’s purchasing power over 20 years if that person were receiving the monthly average Social Security retirement payment of $1,341. At 3 percent, purchasing power would shrink by more than $117,000.
“Seniors or retirees face a different inflation environment than nonretirees,” said Matthew Drinkwater, an assistant vice president at the institute who participated in the research. As a result, inflation is near the top of the list of things people fear about retirement.
