Reports of increasing inflation are published in the media on a regular basis. We cannot be certain whether we are headed into a period of high inflation where our money will buy fewer goods and services than it now does. However, it is still helpful for us to be prepared in the event the devaluation of the dollar does occur.
One of the most common sense ways to prepare is to reduce liabilities and increase assets. See where expenses can be cut and try to pay off outstanding loans. Invest in vehicles that provide income in the form of dividends and other positive cash flow. Identify assets that are bound to increase in value and make investments in those.
Having savings in the bank will allow an individual to live more comfortably during retirement, even in an era of high inflation. Save at least 15 percent of gross income to meet this goal. Those who are already retired should make a point to spend less than five percent of their savings each year. This will keep them on track to live without sacrificing during their remaining golden years.
Pay income taxes now rather than deferring them if tax rates should rise even more. Income taxes are near their all-time low but will likely not stay there, in light of the current economic state. Consult with a tax advisor and find out how to pay your income taxes before they are due. Though no one is excited about paying taxes, it’s sometimes better to bear the pain now than in the later years when tax rates have skyrocketed.
Purchasing a fixed annuity containing a lifetime income rider can provide valuable benefits to people in certain stages of life. Receiving a guaranteed income for the rest of one’s lifetime is the largest of those benefits. There are various tax benefits to annuities and in some states, an annuity provides protection from creditors.