Inflation Creates A Retirement Puzzle, Says Researcher

Retirement for some is an exciting chapter of their life where you have additional time to spend for yourself and your family, however, it is usually associated with some risks that may get in the way of having a fruitful retirement. Longer life expectancy, market volatility, inflation and unforeseen circumstances are some of the major risk to your retirement years, all these can eventually deplete your nest egg leaving you worried on how not to outlive your resources. There are lots of investment product with deceptive sales pitch promising higher yield, but retirees should be wary, because higher yield means bigger risks. Based on www.annuitydirect.org, it is recommended to put a portion of your money in an annuity with less risk and guaranteed income like an immediate annuity, but it may not be enough as payouts from immediate annuities may not be able to keep up with an inflation, you can invest another portion of your money to a similar product so you can have a mix investment. Experts also recommended to ladder your immediate annuity so your money can adjust to the inflation rate. There are also new products like a retirement spending account which offers clients with more autonomy on they investment. Either way, each product can be a good or bad choice so you have to determine if they fit your situation and financial strength before deciding to buy.

While I helped develop one of the few true inflation-protected (with caps) income annuities about 10 years ago, I agree with the author that they should be used in moderation. In terms of planning, I feel that adjustments for a combination of both lifestyle and inflation changes should be made less frequently, say every five years. These planning changes could be coordinated with an increased funding of guaranteed retirement income.