Protect Your Retirement Income in Denver - Beware of Inflation & Taxes

Dec 10

Are you trying to protect your retirement income? If so, it's important to be aware of the dangers of inflation and taxes. Inflation can strongly affect your retirement plans in Denver Colorado. Speak to a Retirement advisor in Denver for more information:

A&I Financial Services is a fee-based investment advisor & fiduciary financial planner in Denver, Colorado operating since 1986. A&I offers comprehensive financial planning, retirement planning, investment advice, IRA & 401(k) management, wealth management & life insurance to a small number of successful families and business owners. A&I is a fiduciary. We promise to put your financial interests ahead of our own. Our Certified Financial Planner team has 100 years of combined experience. Our CFP practitioners use an advanced financial planning process to listen and to know your values, goals, relationships and more. Our one-page comprehensive financial plans are also easy to understand. Grow and protect your investments.

Inflation is one of the biggest threats that retirees face today. You might think that inflation doesn't affect retirees because they don't go shopping every day for food or clothes like younger people do. But, because costs for things like healthcare rise faster than other expenses, the cost of living can rise at a fast rate even if you're not buying many goods or services.

Inflation can be a serious threat to your retirement. If you were to invest $100 today and it earned 3 percent interest, that money would grow to about $117 in a year. But if inflation is at 2 percent a year, the same investment will only be worth about $114 after a year. It worked out fine as long as inflation was less than the return on your investment!

But what happens when high inflation combines with high taxes? In 1974, for example, inflation was at 9 percent but so were tax rates for higher-income earners. A single man who made more than $72,000 that year had an effective federal income tax rate of over 84%. And that doesn't account for state or local taxes or Social Security taxes.

Taxes can take a big bite out of your retirement income, especially in high-inflation years. It's important to plan accordingly and make sure you have enough saved up to cover your costs. You may also want to consider investing in assets that are less affected by inflation, like Treasury Inflation-Protected Securities (TIPS).

If you leave your money in an account where it will be safe from inflation (for example, in savings accounts), then the cash won't grow as much as it would if your money was kept in riskier investments. This means during your retirement, your savings will only go as far as inflation lets them.

What's more is that some investments are taxed more heavily than others - which also affects the amount of money you have to live off of. Unfortunately, all too often retirees end up losing a lot of their wealth due to poor taxation issues. So if you're retired and looking for ways to protect your income without putting yourself on the line, then it's important that you take into account how much taxes can affect your finances.

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It's important to be aware of the dangers of inflation and taxes in order to protect your retirement income. By planning ahead and taking steps to safeguard your savings, you can make sure that you'll be able to enjoy a comfortable retirement. Thank you for reading!