Inflation is real

Matt Carroll St. Louis Cardinals

May 19, 2023


One of the most important lessons learned from 2022 is that inflation is real and can have a significant impact on your retirement savings. In the United States, the Consumer Price Index (CPI) rose by 7.5% in January 2023, the highest rate of inflation in 40 years. This means that the cost of goods and services has increased significantly, which can make it difficult to afford your living expenses on a fixed income.

If you are concerned about inflation, there are a few things you can do to protect your retirement savings. First, make sure you are investing in assets that have historically outperformed inflation, such as stocks and real estate. Second, consider using inflation-protected investments, such as TIPS (Treasury Inflation-Protected Securities). Finally, make sure you have a diversified portfolio that includes a mix of different asset classes.

The stock market is volatile

Another important lesson learned from 2022 is that the stock market is volatile. The S&P 500 index fell by more than 10% in the first quarter of the year, its worst start to a year since 1939. This volatility can be scary, but it’s important to remember that the stock market has always recovered from its declines in the long run.

If you are investing for retirement, it’s important to have a long-term perspective. Don’t let short-term volatility scare you out of the market. Instead, stay focused on your long-term goals and continue to invest regularly. Over time, the power of compound interest will help your investments grow and reach your retirement goals.

Social Security is not enough

Many people rely on Social Security to provide a significant portion of their income in retirement. However, it’s important to remember that Social Security benefits are not enough to live comfortably. In fact, the average Social Security benefit is only about $1,657 per month.

If you want to have a comfortable retirement, you’ll need to supplement your Social Security benefits with other sources of income, such as a pension, 401(k) or IRA savings, or part-time work. It’s also important to make sure you have enough savings to cover unexpected expenses, such as a long-term illness or a major car repair.

You need to start saving early

The earlier you start saving for retirement, the better off you’ll be. This is because of the power of compound interest. Compound interest is the idea that your earnings earn interest on top of your earnings. Over time, this can lead to significant growth in your savings.

If you wait until you’re in your 50s or 60s to start saving for retirement, you’ll have a much harder time catching up. That’s why it’s important to start saving as early as possible. Even if you can only save a small amount each month, it will add up over time.

The lessons learned from 2022 are a reminder that retirement planning is important. By following these tips, you can increase your chances of having a comfortable and secure retirement.

Here are some additional tips for retirement planning:

  • Get professional help. A financial advisor can help you create a personalized retirement plan that meets your specific needs and goals.
  • Review your plan regularly. Your financial situation and needs will change over time, so it’s important to review your retirement plan regularly and make adjustments as needed.
  • Stay flexible. The future is uncertain, so it’s important to be flexible with your retirement plans. Be prepared to make changes if necessary.

By following these tips, you can take the necessary steps to secure your financial future in retirement.