The U.S. Dollar: World’s Top Business Currency
The U.S. dollar has become the world’s top business currency, where it has reached its highest level in four years. This is considered a sign that the American economy is improving, where investors look at the dollar as a safe investment. On the other hand, this could mean that the Federal Reserve may look at potentially raising interest rates.
Why does this matter to you? As an economy improves, it can cause inflation. The average U.S. Inflation rate from 1913 to 2013 was 3.22%. We see time and time again, that as people are planning for retirement, inflation is too often missed. If we take for example a 3% inflation rate, over the course of 20 years, you would need a plan to double your income, just to maintain your same standard of living.
To put it in perspective, if you have $100,000 today, you will need approximately $180,000 in 20 years! Today, people are living longer, where the average life expectancy is 78 years old. The average couple will live 30 or more years in retirement and half of today’s 65-year-old men are expected to live to age 85 and half of today’s 65-year-old women are expected to live to 88. Throughout retirement, there are a lot of costs that you have to consider, such as healthcare and living expenses, and taking inflation into account is a must in order to give you sufficient retirement income to meet all your expenses.
What is your plan to double your income in retirement? If your portfolio is not equipped to withstand an increase in inflation rates, I suggest you contact us to schedule a portfolio stress test and review your financial retirement plan.