Our fifth “Income for Life” strategy series deals with Social Security, specifically seeing how delaying Social Security Benefits will benefit you. While you may not think of it as an inflation beater since it is primarily determined by the amount you pay into the system, the good thing about Social Security is it comes with an automatic cost-of-living adjustment (COLA). For 2017 the COLA was 0.3%; however, it is projected to hit 2.2% in 2018.
Retirement will look different for every person. How you plan is vital to your success. Whether you use the bucket strategy or just try managing your spending habits, one of the most important tactics is staying ahead of inflation. Don’t let inflation erode your purchasing power. In order to keep that from happening, you may need to enhance your retirement paycheck with other sources of income. That’s the purpose of this fourth income for life strategy—pulling income from your investments.
As we dig further into the income for life strategies, remember that even the best-laid plans can go awry. However, if you’ve taken any steps you doing better than half of the country when it comes to your retirement. Nevertheless, there is one area you may have forgotten to account for—inflation. So if you’re hoping to have a nest egg outlast you then this is one caveat that should not be ignored—investing to beat inflation!
As a child, I vividly remember playing Chicken with my younger brother. We would hop on our bikes driving straight for each other waiting to see who would be the first “chicken” and swerve away and ultimately lose the game. Of course, there were also times we walked into the house with bruised elbows and skinned knees because neither of us was willing to let the other outdo us. We were so hardheaded we chose to crash into each other. A recent phone conversation with a client had me reminiscing that game. They wanted to know my thoughts were on the current market—especially with the recent events. Just this past weekend we saw a madman open fire on a small Texas church. Last month’s deadly rampage in Vegas stunned the world. Additionally, just this past summer, it hurricane after hurricane pummeled the gulf. So with all the chaos dominating the news, they are concerned with how these events will affect their retirement.