The news is everywhere: Inflation is at a 30-year high, and our money is becoming less and less valuable. This means the money you are working to save for retirement will not get you as far as you may have originally planned. Luckily, there are ways to protect yourself and your life’s savings from inflation during this unpredictable time. Keep reading to learn more about inflation, how it impacts your retirement, and how gold can protect retirement savings from inflation.
What is Inflation?
According to Investopedia, inflation is the decline of purchasing power of a given currency over time. A quantitative estimate of the rate at which the decline in purchasing power occurs can be reflected in the increase of an average price level of a basket of selected goods and services in an economy over some period of time. The rise in the general level of prices often expressed as a percentage means that a unit of currency effectively buys less than it did in prior periods.
Inflation can be contrasted with deflation, which occurs when the purchasing power of money increases and prices decline. Inflation is sometimes classified into three types: Demand-Pull inflation, Cost-Push inflation, and Built-In inflation. The most commonly used inflation indexes are the Consumer Price Index (CPI) and the Wholesale Price Index (WPI).
How Does Inflation Impact My Retirement?
When considering your retirement savings and how inflation will impact it, you first need to consider how much your money will be worth in 20-30 years. Typical inflation is about 2%, but considering inflation is at a 30-year high right now, you will need to account for more than 2%.
All costs are sure to rise soon, especially by the time you retire. If you plan to have $60,000 per year during retirement, you will need to save almost double that amount in order to have the same purchasing power. Sit down, do your calculations, and consider all of the factors that contribute to the amount you may need to save.
In order to figure out how much money you might need to retire, consider the following factors:
- Do you have any hobbies? If you enjoy certain hobbies that you would like to keep up with after retirement, make sure you factor those in.
- Do you plan on working part-time in retirement? If so, you might not have to draw as much in the first few years of retirement, saving more for later when you’re done working for good.
- Are you planning on traveling? Retirement means finally being able to take all those trips you’ve been dreaming of—or you may decide to go on those dream trips in your younger years.
- Will you downgrade your living situation? You may want to consider selling your home, moving into a community, or moving in with a family member instead of keeping up with a large home.
- Do you have any underlying health conditions? Some health conditions may require more attention when you’re older. If you have one, make sure you account for those needs that your medical insurance may not be able to cover once you are retired.
- Do you plan on leaving money behind? If you plan on leaving money for family, you will need to save more for retirement on the front end in order to accomplish that goal.
How Does Gold Protect My Retirement from Inflation?
Simply put: Gold is a hedge against inflation. According to Investopedia, an inflation hedge is an investment that is considered to protect the decreased purchasing power of a currency that results from the loss of its value due to rising prices either macro-economically or due to inflation. It typically involves investing in an asset that is expected to maintain or increase its value over a specified period of time. Alternatively, the hedge could include taking a higher position in assets, which may decrease in value less rapidly than the value of the currency.
The value of gold rises as the value of the dollar lowers. If you invest in gold, you will always have protection for your savings account. In addition, gold is very liquid. It is easy to buy and sell, meaning that you can dip into your gold savings whenever you need it—not just for retirement. There are also many ways you can invest in gold. Whether it is through physical gold or by rolling your IRA into a Precious Metals IRA, investing in gold takes little-to-no experience or knowledge.
About Priority Gold
If you are ready to invest in gold to protect your savings and secure your future, we can help. Priority Gold is one of the most trusted precious metals dealers in the United States with BBB A+ Rating, AAA Rating with Business Consumer Alliance, and 5 Stars Rating with TrustLink.
We specialize in providing precious metals investment services with Security, Liability, and Great Convenience for customers. Our team is committed to helping streamline their precious metals purchases at a fair price, selecting suitable precious metals portfolios, and meeting their critical financial objectives.
Priority Gold guarantees the highest customer service standards, which come with honesty, professional conduct, and the Ethical Code of Business. We offer Free Storage for qualifying Gold & Silver IRA accounts, a fast & easy gold buying process, and smooth IRA Transfer—and gold shows up on schedule.
For more information, visit us at prioritygold.com