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LEARN ABOUT: Investing During Inflation
REVEALED: Best Investment During Inflation
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Federal retirement benefits such as Social Security, Civil Service Retirement System (CSRS), and Federal Employees Retirement System (FERS) are designed to provide a comfortable retirement income for federal employees. However, there’s one big factor that can erode the value of these benefits over time: inflation. Inflation can reduce the purchasing power of your retirement benefits and make it difficult to maintain your standard of living. Thus, it is essential to take steps to inflation-proof your federal retirement benefits.
Here are some ways you can protect your federal retirement from inflation:
1. Invest in TIPS (Treasury Inflation-Protected Securities)
TIPS are bonds issued by the U.S government that are indexed to inflation. TIPS provide a guaranteed return that keeps pace with inflation. The principal value of TIPS increases with inflation, while interest payments are adjusted for inflation. Investing in TIPS can be a great way to protect your retirement income from inflation.
2. Delay Social Security benefits
Social Security provides guaranteed income that increases with inflation. However, the amount of your Social Security benefits depends on your retirement age. If you delay taking your benefits until after your full retirement age, your benefits will increase by 8% per year until you reach age 70. Delaying your Social Security benefits can be an effective way to increase your retirement income, especially if you expect to live a long life and want to protect your benefits from inflation.
3. Invest in dividend-paying stocks
Dividend-paying stocks can be a good hedge against inflation. Companies that pay dividends usually have a history of stable earnings and cash flows, which can help them weather inflationary periods. Dividend payments also tend to increase with inflation, providing investors with steady income and inflation protection.
4. Consider a fixed annuity
A fixed annuity is an insurance product that provides a guaranteed stream of income for life. The annuity pays a fixed amount of income, usually on a monthly basis, and provides protection against inflation with an inflation rider. The cost of the rider can vary depending on the insurer, but it’s worth considering if you’re looking for a steady stream of retirement income that keeps up with inflation.
5. Plan for healthcare costs
Healthcare costs are one of the biggest expenses retirees face, and they tend to rise faster than the rate of inflation. It’s essential to plan for healthcare costs and incorporate them into your retirement budget. Consider purchasing long-term care insurance or setting aside funds specifically for healthcare expenses, so you don’t have to rely on your retirement savings to cover unexpected healthcare costs.
In conclusion, inflation is a real risk to federal retirement benefits. The rising cost of living can erode the value of your retirement income over time, making it difficult to maintain your standard of living. However, there are steps you can take to inflation-proof your federal retirement benefits. Investing in TIPS, delaying Social Security benefits, investing in dividend-paying stocks, considering a fixed annuity, and planning for healthcare costs are all strategies that can help protect your retirement income from inflation.
Better save a lot. Cost of assisted living and retirement homes in Florida will break your life savings in 2to 3 years. Between 9-15,000.00 monthly. Wished I’d known this years ago
There has been legislation proposed to make the FERS COLA equals the CSRS COLA. Ii came real close to being passed under the Democrats. Probably won't be passed with a Republican House. But Congress is thinking about us.
The idea that as a retiree before the age of 62 you don't get colas is just another way the government screwed over FERS employees when they switched from CSRS.
Hi Dallen, Question about Social Security and Cost of living adjustments. You say in the video that you get cola’s each year once you are getting Social Security benefits. I am retired and not yet receiving social security and I plan to delay as long as possible. Since we are in a high inflation environment now will my benefit estimate increase with inflation so I will get more at age 67, or do I have to start receiving it before I start getting cola’s. Thanks
I called tsp once and asked about if it were possible to transfer those funds to a brokerage ira. I believe they said you could at 59 1/2. So if still a civilian can you still you transfer current cash assets from tsp to a brokerage IRA, without penalities?
Great strategies, Thanks for sharing! Very helpful.
Your the best mr. Wiggle Wiggle, Great work thanks.