How Is Your Retirement Coming?
It’s inevitable. We are all going to have to retire someday, hopefully by choice and not by illness and prayerfully we will have the necessary funds to do so – after all, you can’t rely on Social Security and payday loans alone for your retirement.
You may have heard that the age in which people are retiring is rising. Now this could be because work is so much more fun than it used to be, or perhaps advances in medical technology is allowing us to spend a couple extra years behind our work desks, maybe we have to work the extra years just to assure ourselves that our retirement will last until we retire from existence.
Is your money not worth what it you used to be? Thank inflation, the silent thief.
The answer is leaning towards the latter. We can stretch out our working careers through a healthy lifestyle and improve our wages at retirement through smart investing but one thing many of us don’t pay enough attention to is the rate of inflation.
What is inflation?
“Inflation is a rise in the general level of prices of goods and services in an economy over a period of time.”
The basic idea of inflation is this, you remember when a candy bar cost you 10 cents, well now that same candy bar will cost you close to a dollar if not more in some places. There was a time that many remember when a single income could provide for a whole household. Today it takes two incomes to provide for a household yet the assets maintained are not any more than they were six decades ago. Inflation rises at about two to three percent a year making a subtle impact on your finances that goes unnoticed by most people until they wake up one day and say “ I remember when a gallon of milk cost under $1″, and when hardly anyone had to get payday loans.
Unfortunately, Americas wages are not keeping up with the rate of inflation which means that each year your buying power is decreasing. If you make a $60k salary and inflation continues at the current rate of inflation which is 3%, you will need to be making $80K ten years from now just to maintain the same buying power that you have currently. The chart below was found on bankrate.com’s website and will give you a good idea of what your future earnings should be over the next few decades to keep pace with inflation.
What will you need to be making?
| What you need if inflation rises: | 3% | 4% | 5% |
| Today |
$60,000
|
$60,000 | $60,000 |
| 10 years |
$80,400
|
$88,800 | $97,800 |
| 20 years |
$108,600
|
$131,400 | $159,000 |
| 30 years |
$145,800
|
$194,400 | $259,200 |
If you would like to play around with these figures a little more you can use the retirement calculator found at Bankrate.com.
It is astonishing to think that a $50K dollar salary will need to be at least $121K in thirty years. Not only do we need to save for retirement, we also need to make sure that our funds last through our retirement years.
Planning conservatively for our financial future is more important today than ever before. For those of us born after the baby boomers, we also have the added pressure that we may never receive our rightful dues from the Social Security System. Our future financial security depends largely upon our ability to invest successfully today, and not solely on payday loans for our financial security – we can’t anyway.
If you haven’t yet started an investment portfolio, the sooner you do so, the better off you will be. With the slumping economy it may seem to be a scary time to invest but then again, where there is crisis there is always opportunity. Now may be the perfect time to make up lost ground.
Ever since I was old enough to take the thought of retirement into consideration, I’ve also known that I may never see it when I’m old enough to retire due to “inflation” and such. Because I know that you can’t work forever but nothing comes free, and I may not see positive retirement benefits, budgeting and saving for a healthy financial future would be a great step to start taking advantage of now while I’m still young.