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How To Protect Your Retirement Savings From Inflation

Team Jar
December 26, 2022
How To Protect Your Retirement Savings From Inflation

Discover how you can effectively plan to build on their retirement savings, considering the effects of inflation.

“There is a whole new kind of life ahead, full of experiences just waiting to happen. Some call it ‘retirement.’ I call it bliss.” –Betty Sullivan

Retirement is a new beginning; with every beginning comes challenges. While retiring gives us time for ourselves and space for exploring other aspects of our life, it also brings many quests to be completed, one of which is savings.

Retirement savings is important to ensure a regular source of income after retirement and financial security after we stop working. Making a retirement plan may seem too early for some of us, but starting early will help us reap its benefits in the long run.

Retirement planning will put everything into perspective as it will give us a clear picture of our objective in the future. We must keep aside the savings for retirement to avoid being overwhelmed by the financial burden of saving quickly as we near retirement age.

Some of the benefits of a retirement plan are:

●      Financial Backup for Emergencies

●      Returns on investment

●      Tax benefits

●      Cost savings

●      Financial Independence

●      Protection from Inflation

●      Source of income

●      Legacy opportunities

●      Early retirement options

●      Protection of assets and properties

One of the major concerns is to protect our retirement savings from inflation. We must overcome the inflation effect on retirement to lead a peaceful, fruitful and fun life after retirement.

 

Shield the Savings!

We all desire to lead a hassle-free life. Proper health, a good amount of wealth and ticks on our bucket list. The cost of living will drastically increase in the next 15 to 20 years, and we must be prepared for that. Inflation will undoubtedly hit our savings and income.

Plan Wisely

According to the report generated in 2021, only 24% of Indians have thought about their retirement plan. The best way to prepare for what will come later is to start early. One of the best advantages of investing early is that it can compound our investments significantly.

Building savings for retirement at an early stage will help us lead a healthy life; also, investing early will yield higher returns on our money.

We can manage the corrosive effects of high inflation by keeping in mind some retirement strategies. Although we cannot completely avoid inflation, we can manage it by following some of the best practices:

Keep your retirement savings on track: Cut costs, reduce expenses, and save in small amounts. We may conserve energy usage; for example, this may have a lesser effect on our budget by the spike in inflation.

●  Investments: Investing is another way to keep inflation from hitting us. Investments that can protect us against inflation include annuities, inflation-protected treasury securities, savings bonds and real estate.

Determine retirement spending needs: We must have realistic expectations from our retirement plan, and we must be able to estimate our expenses after retirement to keep track of withdrawing the money and investing.

● Monitoring health care expenses: We must ensure that we always keep aside a lump sum of money for our well-being. Health factors will be a major concern after or before retirement. Funding for unexpected expenses like these must be looked into.

● Consider Social Security claiming decisions: Social security benefits are a guaranteed source of income. They are adjusted each year to account for the cost of living changes. These are the best inflation hedges and a valuable source of income in retirement.

These were some strategies to keep in mind to help us plan our retirement plan and manage inflation. However, an effective retirement strategy relies on accurate household expenses estimation and annual budgeting to adjust the spending based on inflation rates, market conditions or any personal circumstances.

While inflation will reduce the spending power of cash on hand over time, having an emergency fund will save us from rising inflation rates. Holding the money still may backfire; therefore, investment is one of the most preferred ways to gain profit.

Managing long-term growth with near-term income needs makes it crucial to revisit our plans regularly and amend them accordingly.

Also, keeping stocks in our retirement portfolio can protect us from inflation. Post-retirement, spreading our money across different asset types- cash, bonds, and shares can help us reduce risk and have a less inflation effect on retirement.

We can use the Bucket strategy to meet retirement goals. Our savings for retirement can be designated a time frame for investment. For instance:

Bucket one: first 3 years

Bucket two: next three to 10 years

Bucket three: 10 years and above

These can vary according to the bucket strategy we plan for ourselves. This strategy can help us make a proper retirement plan and protect our retirement savings from inflation.

Wrapping Up

Saving enough for our future is a crucial part of our financial plan. While we have a stable income source, we must practice saving which will help us manage our funds and live the rest of our life after retirement peacefully. While the above mentioned strategies can prove effective, wrong decisions may disrupt our golden time.

Therefore, we must plan and consider the best way to be financially sound even after retirement to stay away from the catch of inflation.

Jar is a platform that can help us save our money and put it to better use. Jar App helps us save by investing in digital gold. It works by rounding off our daily spending and setting aside the additional money as an investment. Jar App is built on the strong foundation of investing as a habit.

Jar App is 100% safe and secure for our daily savings and investment in gold. SafeGold powers it, and all the payments happen via safe banking networks. Jar App also provides different avenues of savings apart from round-offs, which are ‘Daily savings’ and investing in digital gold ‘manually’.

●   Daily savings: we can set a fixed amount from Rs 20 to Rs 2000 with the auto-pay feature to be deducted from our account and invest in digital gold daily.

●   Invest manually: To purchase gold manually, click on the ‘Invest More’ button on the Jar home screen, enter the amount of gold you need to purchase and make the payment. Once the payment is done, the gold will be added to our Jar locker.

Any Indian citizen over 18 who banks with SEBI-recognized bank may invest in Jar.

Start early! Save more! Make the new beginning bliss.