It is definitely an appropriate question. Will your retirement dreams go down the tubes because of inflation?
Ready or Not
Let’s say you are on the cusp of retirement, or have already retired. Ot maybe it is a few years away. Maybe you’ve made a retirement budget, or maybe you’ve just got a ballpark figure in your head. Well, it doesn’t really matter, because inflation is going to wreck your finances no matter what. Or so it seems.
Devaluation
Inflation, it has been said, is a devaluation of your assets and currency. As prices rise, your money buys less. You need more and more money to buy the things you want and need. But is your income increasing at the same rate? Likely not….
Reactions
Maybe you are still working, and perhaps you will be able to get a raise. Will it match inflation? Maybe you will try to cut back on some expenses. Will you be able to cut back at the rate inflation is growing? Maybe you are already retired. Perhaps you get income from things like Social Security or a pension; maybe you will get some increases. Will these increases match inflation’s expansion? In all these cases, I suspect that the answer is likely: No.
How To Find A Way
What is a solution to this rising prices dilemma? If one has access to income that has the potential to increase as inflation increases, then there is hope that one would not fall behind.
A Way
I prefer owning dividend paying stocks. Dividends are paid by many companies to stockholders. It is common for many large stable companies to raise their dividends every year. And if prices rise, then profits rise, and that means dividends can rise as well.
Receiving dividends is a great thing, receiving increasing dividends is a greater thing. We end up getting increasing income for just owning and holding the shares in these companies. Own some dividend-paying stock? That’s when the fun really begins.
Fun? What’s That
I say “That’s when the fun really begins” because once you realize your income from dividends increases over time without your doing any work, you begin relax, and let go of (at least some of) the fear of inflation. You realize that you are on the safer side of the inflation condition.
What Can Be Done
There are things one can do other than owning dividend paying stocks. One could do some gardening to grow some food. One could stock up when finding lower prices on items. Banding together with others on how to strategize together could be helpful. And so on. Despair is not an option. Find others to think through what can be done together.
What Now
Inflation in retirement can be scary. Inflation in retirement can be devastating. Planning and preparation can reduce its reach.
What is your inflation reaction? Let me know here .
The War is a pencil and ink drawing of refugees by Georg Mayer-Marton, 1919. Georg Mayer-Marton was an Austrian Army artillery officer during Worl War I. Courtesy Minneapolis Institute of Art.
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