Build a Sturdy Retirement Portfolio

This is one of many articles written to scare you. Remember good news doesn't sell advertising. Inflation should be a concern for retires but there is no reason to panic. The article fails to point out that, notwithstanding medical costs, retirement expenses tend to decrease with age. A recent study shows how median per capita household expenditures falls with age, declining from $17,409 per person at ages 53 to 64, to $15,414 at ages 65 to 74, to $13,678 at ages 75 and older. See: http://www.urban.org/UploadedPDF/411130_expenditure_patterns.pdf

This decrease in your expenses as you age will counteract some of the effect of inflation.

The article also does point out forcefully enough (for my taste) that by having more invested in stocks, you are taking on significantly more risk. Sure high returns are great, but not at the risk of losing a significant portion of your nest egg.

Given these two points, while it might be prudent to evaluate your current exposure to stocks and consider an increase if your exposure is low, I don't think you need to panic about inflation and be as agressive as this article suggest.

Jonathan D. Edelfelt

Author of Who Said You Need Millions? Retirement Strategies for the Rest of Us

www.WhoSaidYouNeedMillions.com

inflation in retirement

I am unsure about how to estimate the inflation of medical costs in retirement. I plan to retire in the next year or so,and have a good handle on what my expenses will be in the first year or so. Should I go 4%, 8%, 12%?