Worried about inflation? Consider these movesSubmitted by Edward Jones,
11:43AM / Tuesday, January 17, 2023 | |
As you know, inflation was big news throughout 2022. But will it continue in 2023? And looking even further ahead, how should you account for inflation in your long-term plans?
In regard to the first question, many experts predict that inflation will cool off this year, though there are no guarantees. The high inflation of last year is thought to have been caused by some unusual factors, such as a spike in the demand for consumer goods as the world came out of the COVID-19 pandemic, which led to supply chain issues. Also, the war in Ukraine drove up oil prices, increasing the cost of manufacturing and shipping and driving up the price of wheat and other commodities.
In any case, last year reminded us that inflation needs to be reckoned with as you work toward your financial goals. But how you respond to inflation will depend somewhat on your stage of life. So, here are some suggestions to consider:
If you're still working …
-
Contribute more to your retirement plans. If you can afford to put more money away in your IRA and 401(k), you may want to do so. The more resources you'll eventually have available in retirement, the better protected you are against the rising cost of living.
-
Adjust your portfolio objectives with your financial professional. Using tools such as "hypothetical" illustrations, a financial professional can show you some different paths you might take with your investments, given different rates of inflation. So, for example, if you feel that inflation may be higher for a longer period than you once thought, you could request a hypothetical showing how you might need to adjust your investment mix to achieve your long-term goals, given your risk tolerance and time horizon.
If you're already retired …
-
Consider part-time work or consulting. Once you retire from your career, it doesn't mean you can never do any paid work again. If you've accumulated years of experience and expertise, you could use your skills as a consultant. Also, many part-time jobs are available for retirees. With the added income from employment, you may be able to delay taking withdrawals from your retirement accounts and other investments, possibly extending their longevity. (Once you turn 72, though, you will need to begin taking money from your 401(k) and traditional IRA.)
-
Delay taking Social Security. You can begin taking Social Security when you're 62, but your monthly checks will be substantially bigger if you wait until your full retirement age, which will likely be between 66 and 67. (You could even wait until 70, at which point your monthly benefits will max out.) Of course, the ability to delay taking Social Security depends on whether you can afford it, but it may be possible if you work longer than you once planned or if you work part time in retirement. But even if you do need to take Social Security before your full retirement age, your payments will be adjusted annually for inflation — in fact, for 2023, benefit checks will rise 8.7 percent over 2022.
We'll always have to deal with some level of inflation — so it's a good idea to be prepared.
This article was written by Edward Jones for use by your local Edward Jones financial advisor. Courtesy of Rob Adams, 71 Main Street, North Adams, MA 01247, 413-664-9253.. Edward Jones, its employees and financial advisors cannot provide tax or legal advice. You should consult your attorney or qualified tax advisor regarding your situation. For more information, see This article was written by Edward Jones for use by your local Edward Jones financial advisor. Courtesy of Rob Adams, 71 Main Street, North Adams, MA 01247, 413-664-9253.. Edward Jones, its employees and financial advisors cannot provide tax or legal advice. You should consult your attorney or qualified tax advisor regarding your situation. For more information go to www.edwardjones.com/rob-adams.
|
MEMBER SIGN IN
