Will Inflation Make An Influential Return in 2018?

Will inflation make a return in 2018? The rate of inflation has
been way below expectations for the last couple of years. For most
of us, this isn’t a problem, but you should be wary.

While I don’t want to waste too much of your time going over what
specifically causes inflation, I know we’re all familiar with the
idea that our money loses its value over time. Typically,
inflation each year is estimated at 3%, but for the last few
years it’s been under 2%. Most of us would never complain about
this, because we like not having to pay an increased price for
our goods and services.


Economists have no idea why this has happened, butin December, a
report came out saying we can expect an uptick in the inflation
rate. If we find ourselves moving back to the normal 3% rate of
inflation, you need to know what impact that will have on your
savings plans. There are two groups of people I worry about when
it comes to planning for inflation: those near retirement with
“Lazy Money” and those who are creating retirement plans.
There are two groups of people I worry about when it comes to
planning for inflation: those near retirement with “Lazy Money” and
those who are creating retirement plans.

If you’re nearing or in retirement now, you need to be aware of
how much money is what I like to call “Lazy Money.” This is money
that people have sitting in cash, a saving account or CDs.
Savings that I consider part of lazy money are those that are not
growing with inflation. I can give you countless stories of
people who ended up not having enough money for retirement
because too much of their savings was lazy money instead of
investments. When the inflation rate goes up, what happens to
everything sitting in your savings account? You essentially end
up losing money over time, because your savings are losing their
value with no growth to make up for it. I understand why people
are nervous about investing their savings. They’re nervous about
losing everything they’ve worked for, but you need to find a way
to balance out the lazy money in your portfolio.
You essentially end up losing money over time, because
your savings are losing their value with no growth to make up for
it.

If you are working on your retirement plan right now, have you
factored in the effect of inflation long term? Most people forget
about inflation when they make their own savings plans. They
create these huge, intricate spreadsheets to plan for their
future, but typically leave out the expected rate of inflation.
This rate affects not only how much you should save year-to-year
but also how much you’ll need to draw out of your savings once
you retire. If you don’t adjust your plan for inflation, you run
the risk of running out of money.


This is also a big problem I see with people who have built their
retirement plan with financial planners. Many financial planners
will create extensive plans for their clients, give it to them
with a few suggestions and send them on their way without ever
speaking to them again. What’s the issue with that? This initial
plan is static and just a starting point.
Many financial planners will create extensive plans for their
clients, give it to them with a few suggestions and send them on
their way without ever speaking to them again.

Think of it like this: remember before everyone’s phones had GPS?
You have to use Mapquest or a real map to figure out how to get
to a new destination. It was fine for road-by-road instructions
to get where you were going, but if there was a traffic jam or
road work, you didn’t know how to adjust your route. Unlike these
new GPS apps like Waze, which adjust your route as you go to help
you avoid traffic and get to your destination as quickly as
possible. Your life isn’t like Mapquest. It’s like Waze and your
financial plan should reflect that.


If you made a plan with an advisor 5 to 10 years ago, even if
they calculated for inflation, make sure you take a second look
at everything and update it as things change. You need to come to
terms with how unexpected things, like inflation, will impact
you, whether your savings are in cash and not growing or your
homemade plan hasn’t been updated recently. Planning for
retirement is a moving target. It can change dramatically from
year to year. You have no idea what your life will look like in
six years or even six months. You want to create a plan that you
constantly reevaluate and change as your life evolves.
Planning for retirement is a moving target. It can change
dramatically from year to year.

That’s where I can help. I’m going to be a bit of nerd and brag
about the software we have available for you. It is so cool!


The first thing you see when you open up your account is
absolutely everything in your portfolio: your savings account,
your investments, your 401k, everything. It also has the most
advanced program to create a retirement plan for you. We can go
in at anytime and evaluate your plan based on how your financial
situation looks at that exact moment. We update your plan as life
happens to make sure it works best for you. Life isn’t static and
your retirement plan should not’ be either.
  You don’t have to live with concern or anxiety about
your future. We’ll create a clear, specific savings plan that
changes as your life does.

 


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