Once you retire, a sound retirement plan should provide you with a reasonable budget that covers your expenses. But with inflation rising rapidly, how will your retirement income and lifestyle be impacted? And is there anything you should be doing to combat any potential negative effects?
Don’t panic. The first thing to do is remember that financial decisions should not be made under duress. Don’t let fear prompt you into impulsive choices that could later backfire. If you’re concerned about your retirement fund or budget at this time, call us first.
Cut unnecessary expenses now. Rather than worrying about the future and how badly inflation might eventually impact you, go ahead and take proactive measures to reduce your monthly expenditures. You will feel better and more prepared, and you can begin saving money before it’s a dire need to do so. And if inflation eases, you can always add a few of those “extra” items back into your budget.
Inflation might not affect retirees as much as you fear. Gas prices could be your main concern, but luckily you no longer face a daily commute for work. If you need to stop traveling, remember that this situation is probably temporary.
Mind your tax impacts. If you do need to take an additional withdrawal due to rising expenses, consider taking it from a Roth account. This withdrawal won’t add to the year’s taxable income, so you won’t trigger extra income taxes.
Look forward to a recovery. Historically, tough economic periods are always followed by a recovery. Selling off too many assets now could cause you to miss significant opportunities for growth later. So before you sell off more than you really need to, let’s schedule an appointment to discuss your options.
If inflation seems to be impacting you more than you anticipated, contact us to schedule an appointment. We can help you identify potential streams of income and investigate other ways to survive the current economic conditions.