Education Materials
Back to Education Materials

Inflation – An Important Factor

Inflation is a real threat to you retirement income sufficiency, but saving early and investing wisely can help you safeguard your savings.

Invest Now to Outpace Inflation. Health care. Basic living expenses. Leisure activities. These are all important factors to consider when determining how much you’ll need to save for retirement. However, don’t forget about the potential impact of inflation.

What is inflation?

Inflation is a calculation of average price increases over a given year, typically shown as a percentage. As inflation increases, it reduces the purchasing power of a dollar. The U.S. has seen inflation fluctuate year over year. For example, in 2008, inflation averaged 3.8%, in 2015, 0.1% and in 2018, 2.4%.1

Take a look at how prices may change over time:

————————————-2019————20 years
New car                               $33,500        $60,504
Week-long vacation        $2,500           $4,515
Round of golf                    $40                 $72.24
Cup of coffee                     $2.70             $4.88

Current prices are estimates. Future prices based on an annual 3% rate of inflation.

What can you do about inflation?

Inflation is an inevitable reality, but there are things to consider when planning ahead to help defend against inflation.

  1. Are you participating in your company plan? If your company offers a match, are you saving enough to get the full match?
  2. Does your overall portfolio include an investment lineup designed to hedge against inflation?
  3. Think about your vision for retirement and how you want to spend your time. Are you saving enough to reach those goals?
  4. Use our online “How Much Will I Need to Save a Month” calculator on to help you determine how much you will need to save. This tool takes into account inflation when making calculations.

Inflation is a real threat to your retirement, but saving early and investing wisely can help you safeguard your savings.