3 BIG Retirement Risks You Should NEVER Take (and Why)

Inflation

Inflation is another one of the retirement risks most retirees forget to plan for. In general, inflation happens when the price of goods increases while the purchasing power of the people decreases. And given the economic climate of our country in recent years, inflation is something that we have been dealing with and will probably have to tackle in the years to come as well.

When looking at statistics, since 1914, the median inflation rate has reached 3.24%, and it is thought to remain constant despite the percentages, which are higher when we look at the incoming months.

Spending power is extremely relevant when we discuss retirees, as it can easily be politicized and exaggerated by political parties to gain more trust from voters, but it can also pose a serious threat to your retirement savings. In a world where price gauging and supply chain issues are more prevalent from year to year, it is good to be safe and not take any risks when it comes to retirement savings.

A great way to ensure that you are taking into consideration the retirement risk of inflation is to make sure you invest in some securities that are going to help you hedge against inflation. The ones we recommend you look into are Treasury Inflation-Protected Securities (TIPS) and Series I bonds, as they seem to be the most stable when it comes to investments and pretty risk-free.

Series I bonds, when we look at their trajectory in 2022, have had an interest rate of 9.62%, but you can only buy them up to $10,000 or $20,000 if you get them as a couple.

The best way to protect yourself against inflation is to also make sure you do not take unnecessary risks with your hard-earned money. This includes staying away from speculative and high-risk schemes, including penny stocks, private equities, and any alternative investments anyone suggests to you if you cannot afford to risk anything.

If you are curious to know more about inflation, how it operates, and how to understand it in order to be able to combat it, we recommend this book you can get on Amazon: Inflation: What It Is, Why It’s Bad, and How to Fix It.