Here is the problem with most retirement savings… they do not out-pace inflation. Most people do not take into account inflation when planning their emergency savings or retirement savings.
Inflation is the increase in the price of goods and services over a period of time. Over the last 5 years, the inflation rate was 6.84 percent. The average 10 year inflation rate is 3.22%. 1984 cost of house goods cost $43. By 2044, those same goods will cost $257!
What does this mean for your financial goals or for your retirement? You need to outpace inflation in order to avoid falling behind.
Unless your savings doubles every 30 years or so, you will not have the security you thought you would have. At that time, there is not much you can do about it. It is vital you address it now!
Inflation can potentially equalize if not errase any interest earned on your savings if the right investment strategy is not used.
Take advantage of a compounding interest
By setting aside $200 every month for 35 years and the principle amount compounded at 8% annually, the total principal amount could be over $450,000 at the end of 35 years.