Inflation is the increase of the cost of goods and services you use everyday and for retirees, inflation affects them significantly. For many retirees, their income is fixed at a certain level, so as the cost of goods and services go up, their buying power is diminished and their income is decreased by the percentage increase by inflation, says Jonathan Jackson, of Freedom America Inc. in Brandon, Florida.
Jackson says that retirees should be cautious regarding the type of income they select, adding that a lot of advisors will recommend a retirement income that is locked in at a certain level. He says that while at the surface this seems to be a good idea because these products will pay a slightly higher amount in the early years, depending on the amount of inflation we see, that income can very quickly become obsolete. "Retirees need to remember that retirement is a 30 year marathon, not a 5 year sprint," says Jackson.
There are new types of products available that will guarantee income for life for a retiree, according to Jackson. Instead of a fixed amount every year, that amount will increase each year to offset the cost of inflation, so the retiree's buying power won't be diminished.
Jonathan Jackson is with Freedom America Inc. and can be reached through his website or by calling 813-600-5314. Jackson spoke with Retirement News Today, providing online, on-demand retirement news video content.