4 Retirement Issues You're Probably Not Planning For
If you've developed a well-researched and comprehensive retirement plan, then good for you (and bonus points if you put it in writing). But before you get too cocky about your well-funded retirement, check to see if your plan has left out any of these common issues. If it has, you could end up with a much smaller retirement income than you expect, as your savings gets gobbled up by these unexpected expenses.
Inflation is the sneaky retirement-killer. It's the reason why a dollar won't buy as much today as it would 20 years ago. Inflation has averaged around 3% per year since the government began tracking it in 1913, although it can vary significantly over the short term. That means you must assume that your retirement savings will lose about 3% of their value every year.
To beat inflation, you need to pick investments that will produce high enough returns to outpace the loss of your money's value. Historically, stocks are the only investment to reliably beat inflation year after year, with large-cap stocks producing an average return of around 10% before inflation over the past century. That's why even retirees need to keep some money in stocks, despite their volatility.
Source: Fool.com
