Inflation plays a part in our lives whether you are a new parent, seasoned grandparent, or the tooth fairy. Planning ahead will help to minimize your stress when inflation rears its ugly head.
• College savings accounts let you put money aside to cover the costs of higher education. Assets grow tax-deferred and can be used tax-free for allowed expenses.
• Cafeteria plans can be used to cover basic health care costs, glasses, dental work and braces, and even day care with tax-free money. If you know you are going to spend the money, do it before giving Uncle Sam a cut. Check with your employer to see if they offer cafeteria accounts.
At retirement, the shift to living on a fixed income can be harsh. At this stage, incomes are fixed and even compress over time.
Overall, inflation may be flat, but many services retirees need continue to rise; take for instance health care, long-term care, and housing.
One way to protect your income from the impact of inflation is through a retirement income plan. Understanding how and when each of your dollars will be used to provide income during retirement allows us to implement strategies to help protect your nest egg against inflation and other major factors.